The before-tax income for Lonnie Holdiman Co. for 2014 was $101,000 and $77,400 for 2015. However, the accountant noted that the following errors 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 recording interest expense for both 2014 and 2015 on bonds payable made the following entry on an annual basis.

Interest Expense 15,000

Cash 15,000

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