Fundamental Accounting Principles 22th Edition by John Wild ,Ken Shaw,Barbara Chiappetta

Exercise 7

A review of the notes payable files discovers that three years ago the company reported the entire $1,000 cash payment (consisting of $800 principal and $200 interest) toward an installment note payable as interest expense. This mistake had a material effect on the amount of income in that year. How should the correction be reported in the current-year financial statements