(Error Analysis) The before-tax income for Lonnie Holdiman Co. for 2014 was $101,000 and

^{$77,400 for 2015. Howeve r , the accountant noted that the following er r ors had been made:}

1. Sales for 2014 included amounts of $38,200 which had been received in cash during 2014, but for which the related products were delivered in 2015. Title did not pass to the purchaser until 2015.

^{2. The inventory on December 31, 2014, was understated by $8,640.}

^{3. The bookkeeper in r eco r ding inte r est expense for both 2014 and 2015 on bonds payable made the}

^{following entry on an annual basis.}

Interest Expense 15,000

Cash 15,000

The bonds have a face value of $250,000 and pay a stated interest rate of 6%. They were issued at a discount of $15,000 on January 1, 2014, to yield an effective-interest rate of 7%. (Assume that the effective-yield method should be used.)

^{4. O r dinary r epairs to equipment had been er r oneously cha r ged to the Equipment account during}

^{2014 and 2015. Repairs in the amount of $8,500 in 2014 and $9,400 in 2015 we r e so cha r ged. The}

^{company applies a rate of 10% to the balance in the Equipment account at the end of the year in its}

^{determination of dep r eciation cha r ges.}

Instructions

^{P r epa r e a schedule showing the determination of cor r ected income befo r e taxes for 2014 and 2015.}