ABC Company's December 31 year-end financial statements contained the following errors: 20x1 20x2 Ending inventory Depreciation Prepaid insurance 800,000 understated 400,000 overstated 150,000...

Extracted text: ABC Company's December 31 year-end financial statements contained the following errors: 20x1 20x2 Ending inventory Depreciation Prepaid insurance 800,000 understated 400,000 overstated 150,000 understated 50,000 overstated In addition, on December 31, 20x2, a fully depreciated equipment was sold for 100,000 cash but the sale was not recorded until 2020. Ignore income tax considerations. Requirements: Determine the total effect of the errors on the following: 1. Net income for 20x1 2. Net income for 20x2 3. Retained earnings on December 31, 20x2