IV. The following information is available for Sheef Corporation, which was established in 2015:

The company accountant, in preparing financial statements for the year ending December 31, 2017, has discovered the following information.
(1) The company's previous bookkeeper, who has been fired, had recorded depreciation expense on a machine in 2015 and 2016 using the double-declining-balance method of depreciation. The bookkeeper neglected to use the straight-line method of depreciation which is the company's policy. The cumulative effects of the error on prior years was £15,000. Depreciation was computed by the straight-line method in 2017.
(2) In addition, the company accountant noticed that the net income number £250,000 was incorrect because the following adjustments have not been made. One-year rent £120,000 was prepaid at October 1, 2017. "Prepaid Rent" was debited when £120,000 was paid. Besides, 1% of the accounts receivable £2,000,000 (the balance at December 31, 2017) was considered uncollectible.
Instructions (Ignore income taxes.)