Problem $1$ Show how the following independent errors will affect Year $3$ income before income tax on the Income Statement and the Balance Sheet $($Assets$,$ Liabilities, and Shareholders$$ Equity$).$ Use OVER for overstated, UNDER for understated, and NE for no effect. Include the dollar amount of any misstatement.$$ The company uses the periodic inventory method. Ignore income taxes.$$ Year $3$ Assets$$ Liabilities$$ Shareholders$$ Equity$$ Net Income$$

EXAMPLE$-$The accountant failed to accrue $$1,800$ of wages payable at $12/31/$Year $3.($Assets$)$ NE$($Liabilities $1,800$Understated$)($Shareholders$$ Equity $$1,800$ Overstated$)($ Net Income$$$$1,800$ Overstated$)$

$1.$ The company overstated Year $3$ depreciation expense by $$3,000.$

$2.$ A January $1,$ Year $3$ purchase of equipment for $$30,000$ in cash $($useful life of $5$ years, no salvage value$)$ was erroneously charged to maintenance expense in Year $3.$ A $12/15/$Year $3$ sale of land for $$49,000$ was not recorded until $1/17/$Year $4.$ The land had a cost of $$35,000.$

$4.$ The company prepaid rent for $12$ months on $10/1/$Year $3$ and debited prepaid insurance for $$24,000.$ No adjusting entry was made at Year $3$ year$-$end.$$

$5.$ Travel advances of $$1,900$ given to sales personnel in Year $3$ for Year $4$ travel were recorded as selling expense.$$

$6.$ The company wrote off a $$3,200$ account receivable by debiting Bad Debt Expense and crediting Allowance for Doubtful Accounts$$

$7.$ The company purchased a machine for $$24,000$ at the beginning of Year $1.$ It has a useful life of $6$ years and $$0$ expected salvage value.$$ It was sold on $1/1/$Year $3$ for $$15,000$ but no journal entry was recorded.$$

$8.$The company declared and paid dividends on its common stock totaling $$125,000.$ The accountant on the date of declaration debited Dividend Expense and credited Dividends Payable.$$