In reviewing the accounts of Fisher Company in 2006 after the books for the prior year have been closed, you find that the following errors have been made in summarizing activities:
In 2004 the ending inventory was understated by $3,000. You also find that the company failed to accrue depreciation expense of $800 in 2004. You also find that an insurance premium of $7,200 was prepaid in 2004 covering the years 2004, 2005, and 2006. The prepayment was recorded with a debit to insurance expense.