At the beginning of 2020, Tanham Company discovered the following errors made in the preceding 2 years: 2018 2019 Overstatement of ending inventory $4,895 $1,990 Omission of wages payable 675 760 Omission of allowance for doubtful accounts 1,285 1,635 Prepayment of insurance recorded as expense 490 195 Reported net income was $26,245 in 2018 and $36,405 in 2019. The allowance for doubtful accounts had a zero balance at the beginning of 2018. No accounts were written off during 2018 or 2019. Ignore income taxes. Required: 1. What is the correct net income for 2018 and 2019? 2. Prepare the adjusting journal entry in 2020 to correct the errors.

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