Teal Tool Company's December 31 year-end financial statements contained the following errors. December 31, 2020 December 31, 2021 $10,100 understated $7,700 overstated Ending inventory Depreciation expense $2,400 understated An insurance premium of $68,100 was prepaid in 2020 covering the years 2020, 2021, and 2022. The entire amount was charged to expense in 2020. In addition, on December 31, 2021, fully depreciated machinery was sold for $13,900 cash, but the entry was not recorded until 2022. There were no other errors during 2020 or 2021, and no corrections have been made for any of the errors. (Ignore income tax considerations.) (a) Compute the total effect of the errors on 2021 net income. Total effect of errors on net income $ 7700 overstated : (b) Compute the total effect of the errors on the amount of Teal's working capital at December 31, 2021. Total effect on working capital $ (c) Compute the total effect of the errors on the balance of Teal's retained earnings at December 31, 2021. Total effect on retained earnings $ Presented below are the comparative income and retained earnings statements for Culver Inc. for the years 2020 and 2021. 2021 Sales $349,000 Cost of sales 219,000 Gross profit 130,000 Expenses 81,000 Net income $49,000 Retained earnings (Jan. 1) $130,400 Net income 49,000 Dividends (31,200) Retained earnings (Dec. 31) $148,200 2020 $269,000 142,000 127,000 45,000 $82,000 $72,400 82,000 (24,000) $130,400 The following additional information is provided: 1. In 2021, Culver Inc. decided to switch its depreciation method from sum-of-the-years' digits to the straight-line method. The assets were purchased at the beginning of 2020 for $99,000 with an estimated useful life of 4 years and no salvage value. (The 2021 income statement contains depreciation expense of $29,700 on the assets purchased at the beginning of 2020.) 2. In 2021, the company discovered that the ending inventory for 2020 was overstated by $24,300; ending inventory for 2021 is correctly stated