DETL Corp. made an ordinary repair to a delivery truck with a remaining useful life of three years at a cost of $200. DETL's accountant debited the asset account, Equipment. Was this treatment an error, and if so, what will be the effect on DETL's financial statements?
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DETL Corp. made an ordinary repair to a delivery truck with a remaining useful life of three years at a cost of $200. DETL's accountant debited the asset account, Equipment.
Was this treatment an error, and if so, what will be the effect on DETL's financial statements?
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- The following are independent errors: a. In January 2019, repair costs of 9,000 were debited to the Machinery account. At the beginning of 2019, the book value of the machinery was 100,000. No residual value is expected, the remaining estimated life is 10 years, and straight-line depreciation is used. b. All purchases of materials for construction contracts still in progress have been immediately expensed. It is discovered that the use of these materials was 10,000 during 2018 and 12,000 during 2019. c. Depreciation on manufacturing equipment has been excluded from manufacturing costs and treated as a period expense. During 2019, 40,000 of depreciation was accounted for in that manner. Production was 15,000 units during 2019, of which 3,000 remained in inventory at the end of the year. Assume there was no inventory at the beginning of 2019. Required: Prepare journal entries for the preceding errors discovered during 2020. Ignore income taxes.Jada Company had the following transactions during the year: Purchased a machine for $500,000 using a long-term note to finance it Paid $500 for ordinary repair Purchased a patent for $45,000 cash Paid $200,000 cash for addition to an existing building Paid $60,000 for monthly salaries Paid $250 for routine maintenance on equipment Paid $10,000 for major repairs Depreciation expense recorded for the year is $25,000 If all transactions were recorded properly, what is the amount of increase to the Property, Plant, and Equipment section of Jadas balance sheet resulting from this years transactions? What amount did Jada report on the income statement for expenses for the year?Early in the fiscal year, The Beanery purchases a delivery vehicle for $40,000. At the end of the year, the machine has a fair value of $33,000. The company controller records depreciation expense of $7,000 for the year, the decline in the vehicle’s value. Explain why the controller’s approach to recording depreciation expense is not correct.
- In September, Morrison purchased a new piece of machinery that will be used to manufacture its top selling product. The purchase price of the machine was $2,215. In addition, Morrison also paid: freight, $200; installation, $570; testing , $900; and repairs due to mishandling, $300. Ignoring the depreciation expense, at what cost should the machinery be recorded on the balance sheet?In 2018, internal auditors discovered that PKE Displays, Inc., had debited an expense account for the $350,000cost of a machine purchased on January 1, 2015. The machine’s useful life was expected to be five years withno residual value. Straight-line depreciation is used by PKE. Ignoring income taxes, what journal entry will PKEuse to correct the error?On January 1, Year 1, Marino Moving Company paid $48,000 cash to purchase a truck. The truck was expected to have a four-year useful life and an $8,000 salvage value. If Marino uses the straight-line method, which of the following shows how the adjusting entry to recognize depreciation expense at the end of Year 3 will affect the company’s financial statements?
- A company purchased a computer that cost $10,000, It had an estimated useful life of 5 years and no residual value. The computer was depreciated by the straight-line method and it was sold at the end of the second year of use for $5,000 cash. The company should record:On January 1, 2011, Chicaga Furniture purchased a new delivery truck The company paid $65,000 for the truck, $12,000 for an annual insurance policy and $1,300 for a motor vehicle license. The truck has an estimated residual value of $5,000 at the end of its useful life and Chicago Furniture uses the double-declining-balance method for other similar assets. At what net amount will Chicago Furniture record the truck on its statement of financial position at December 31, 2011?On December 31, Strike Company has decided to discard one of its batting cages. The equipment had an initial cost of $238,400 and has accumulated depreciation of $214,560. Depreciation has been recorded up to the end of the year. Which of the following will be included in the journal entry for the disposal? a. Loss on Disposal of Asset, debit, $214,560 b. Accumulated Depreciation, debit, $238,400 c. Gain on Disposal of Asset, credit, $23,840 d. Equipment, credit, $238,400
- A company purchased a machine at the cost of $759,600 on March 1 of year 1. On the same day, the business paid the shipping company $5,600 to deliver the machine and paid $14,500 to another business to install and test the new machine. The annual insurance policy for the new machine is $8,600. The company’s fiscal year end is November 30. The company’s accounting policy is to depreciate all machines using the double diminishing balance method. The machine has an expected useful lifespan of five-years and an estimated residual value of $30,000. However, the company discovered the machine did not meet its business requirements, so it sold the machine on September 1, year 3, for $156,500. Perform all your calculations to the nearest dollar. Show all your work. Instructions: Write you answers by hand, scan your working papers and upload to the link on the main page of the Moodle website as a PDF file. Show any calculations. Printing the problem information is permitted but only for…In 2021, internal auditors discovered that PKE Displays, Inc., had debited an expense account for the $350,000 cost of a machine purchased on January 1, 2018. The machine’s useful life was expected to be five years with no residual value. Straight-line depreciation is used by PKE. Ignoring income taxes, what journal entry will PKE use to correct the error?A company purchased a commercial dishwasher by paying cash of $5,900. The dishwasher's fair value on the date of the purchase was $6,270. The company incurred $300 in transportation costs, $310 installation fees, and paid a $120 fine for illegal parking while the dishwasher was being delivered. For what amount will the company record the dishwasher?