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?
Q: In 2020, Pina Corporation discovered that equipment purchased on January 1, 2018, for $47,000 was…
A: Debit Credit Equipment a/c. Dr. $47000 To Accumulated Depreciation $ 18800 To…
Q: i) Indicate and explain the effect of any errors on the net income figure reported on the income…
A: Depreciation refers to the fall in the historical value of an asset each year. Depreciable amount is…
Q: n error of $3,000 was found in the audit of depreciation expense of the warehouse purchased in…
A: Auditor is the person who is responsible for checking and verifying the truthfulness of the…
Q: During 2019, White Company determined that machinery previously depreciated over a 7-year life had a…
A: The accumulated depreciation is computed as total depreciation charged on fixed assets till date.
Q: Qec Inc. bought machinery worth $120,000 on January 1st, 2014. With no residual value, it estimated…
A: Depreciation is an accounting technique for distributing a tangible or fixed asset's cost over its…
Q: On January 1, year one, Newport Corp. purchases a machine for $100,000. The machine is depreciated…
A: Prior Period adjustment- When any error is made in the prior period, the respective accounts can be…
Q: Irwin, Inc. constructed a machine at a total cost of $79 million. Construction was completed at the…
A: Depreciation - It the amount reduce from the assets due to usage of the same over a period of time.…
Q: Equipment was purchased on January 2, 2020, for $24,000, but no portion of the cost has been charged…
A: Depreciation: Depreciation is the reduction in the value in a fixed asset due to natural factors…
Q: January 1, 2021, NUBD Co. purchased a new machine for P100,000 with an estimated useful life of five…
A:
Q: The first audit of the books of Concord Company was made for the year ended December 31, 2021. In…
A: An audit seems to be the study or review of multiple accounting records by an auditor, accompanied…
Q: On April 1, 2019, the KB Toy Company purchased equipment to be used in its manufacturing process.…
A:
Q: The Jessica Co. has the following errors on its books as of December 31, 2020. The books for 2020…
A: Journal entries, we make in our business either economic or non economics, it helps to keep records…
Q: What is the impact of the error in 2022 net income?
A: Hardy Man Inc. incurred repair costs of a machine in 2021 for P 30,000 and erroneously capitalized…
Q: Cadillac Construction Company uses the retirement method to determine depreciation on its small…
A: Journal Entry: Journal entry is the act of keeping records of transactions in an accounting journal.…
Q: In 2016, internal auditors discovered that PKE Displays, Inc., had debited an expense account for…
A: Calculate the annual accumulated depreciation:
Q: On January 1, 2021, NUBD Co. purchased a new machine for P100,000 with an estimated useful life of…
A:
Q: The following are independent errors: a. In January 2019, repair costs of $11,280 were debited to…
A: The journal entries for the preceding errors discovered during 2020 are recorded as follows:
Q: In 2016, internal auditors discovered that PKE Displays, Inc., had debited an expense account for…
A: 1.
Q: Hardy Man, Inc., acquired a machine in 2021 for P 400,000 and erroneously charged the cost to an…
A: The straight line method of calculating depreciation is the most simplest way to determine…
Q: Irwin, Inc., constructed a machine at a total cost of $35 million. Construction was completed at the…
A:
Q: For financial reporting, Clinton Poultry Farms has used the declining-balance method of depreciation…
A: The depreciation expense is charged on fixed assets as reduced value of the fixed asset with usage…
Q: JAY Inc. decided to revalue its machine on December 31, 2019, and determined that the current…
A: Given Information: Replacement cost on December 31,2019 $1,500,000 Purchased on January 1,2017…
Q: JAY Inc. decided to revalue its machine on December 31, 2019, and determined that the current…
A: Depreciation: It is the gradual fall in the value of asset due to its normal usage in the production…
Q: Hardy Man, Inc., acquired a machine in 2021 for P 400,000 and erroneously charged the cost to an…
A: Depreciation means the amount fixed assets written off due to normal wear and tear , normal usage ,…
Q: Prepare the journal entries necessary in 2021 to correct the books, assuming that the books have not…
A:
Q: In 2017, Marigold Company discovered that equipment purchased on January 1, 2016, for $55,100 was…
A: Journal: Recording of a business transactions in a chronological order.
Q: In March 2019, Dempo Org purchased production equipment valued at $640,000. In 2021, auditors…
A: Introduction:- Dempo Org invested $640,000 on production equipment. Auditors determined in 2021 that…
Q: On January 1, 2020, Company discovered that it had incorrectly expensed a P2,100,000 machine…
A: Definition: Assets: These are the resources owned and controlled by business and used to produce…
Q: On January 2, 2018, Lapar Corporation purchased a machine for $50,000. Lapar paid shipping expenses…
A: Various depreciable assets employed by the entity has wear and tear over the working period and…
Q: In 2020, Bailey Corporation discovered that equipment purchased on January 1, 2018, for $50,000 was…
A: Pass necessary rectification entries in the books of Bailey Corporation.
Q: Irwin, Inc. constructed a machine at a total cost of $35 million. Construction was completed at the…
A: Total sum = 1+2+3+4+5+6+7+8+9+10 = 55 Accumulated depreciation for 3 years= (Cost - Salvage…
Q: The first audit of the books of Concord Company was made for the year ended December 31, 2021. In…
A: Working Notes: Formula: Computations:
Q: Equipment was purchased on January 2, 2017, for $24,000,but no portion of the cost has been charged…
A: Accounting error: Accounting errors can be defined as omission of the fundamental accounting…
Q: The first audit of the books of Marin Company was made for the year ended December 31, 2021. In…
A: Workings Notes : Incorrect Depreciation calculated for 3 years($468,000 *3/6) $ 234,000…
Q: Colorado Company has been using the sum-of-the-years'-digits depreciation method to depreciate some…
A: Introduction:- Calculation of depreciation for 2019 and 2020 as follows:- 2019 =120,000 x 5/15…
Q: he first audit of the books of Windsor Company was made for the year ended December 31, 2021. In…
A: Journal entry is the process of documenting commercial transactions for the first time in the books…
Q: The first audit of the books of Ivanhoe Company was made for the year ended December 31, 2022. In…
A: Introduction: A journal entry is the activity of recording or keeping track of any financial or…
Q: While reviewing the company’s records for 2019 and 2020, Ms. Croft discovered that no adjustments…
A: PLEASE LIKE THE ANSWER, YOUR RESPONSE MATTERS Item Understated Overstated…
Q: The Laura Company has the following errors on its books as of December 31, 2020. The books for 2020…
A: A Journal entry is a primary entry that records the financial transactions initially. The…
Q: 1, 2020, Cullumber Corp. acquired a machine at a cost of $1020000. It is to be depreciated on the…
A: Depreciation is an accounting method for dispersing a tangible or physical asset's cost over its…
Q: On 30 June 2021, Hercules Ltd omitted to process some items on the last day of the financial year.…
A:
Q: Conrad Playground Supply underwent a restructuring in 2021. The company conducted a thorough…
A: A journal entry is a form of accounting entry that is used to report a business transaction in a…
Q: On April 1, 2019, the KB Toy Company purchased equipment to be used in its manufacturing process.…
A: Depreciation is the non-cash expense which is reported in the books to record the regular usage of…
Q: Irwin, Inc. constructed a machine at a total cost of $39 million. Construction was completed at the…
A: Depreciation: Depreciation refers to the reduction in the monetary value of a fixed asset due to its…
Q: Conrad Playground Supply underwent a restructuring in 2021. The company conducted a thorough…
A: SOLUTION- JOURNAL…
Q: Kentucky Enterprises purchased a machine on January 2, 2019, at a cost of P120,000. An additional…
A: Solution 10: Charging installation cost of P50,000 on repair expense, will result in overstatement…
Q: On January 1, 2019, Layman Company purchased personal computers for P6,000,000. The management…
A: The depreciation is an expense charged on the fixed assets that are used by business for the long…
Q: The total depreciation for the year ended December 31, 2020 is 5. The carrying amount of production…
A: Carrying amount of the assets is the value of the assets which has been computed when the…
Q: While reviewing the company’s records for 2019 and 2020, Ms. Croft discovered that no adjustments…
A: Hello. Since your question has multiple parts, we will solve the first question for you. If you want…
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
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 1 images
- At the end of 2020, while auditing Sandlin Companys books, before the books have been closed, you find the following items: a. A building with a 30-year life (no residual value, depreciated using the straight-line method) was purchased on January 1, 2020, by issuing a 90,000 non-interest-bearing, 4-year note. The entry made to record the purchase was a debit to Building and a credit to Notes Payable for 90,000; 12% is a fair rate of interest on the note. b. The inventory at the end of 2020 was found to be overstated by 15,000. At the same time, it was discovered that the inventory at the end of 2019 had been overstated by 35,000. The company uses the perpetual inventory system. c. For the last 3 years, the company has failed to accrue salaries and w-ages. The correct amounts at the end of each year were: 2018, 12,000; 2019, 18,000; and 2020, 10,000. Required: 1. Prepare journal entries to correct the errors. Ignore income taxes. 2. Assume, instead, that the company discovered the errors after it had closed the books. Prepare journal entries to correct the errors. Ignore income taxes.At the end of 2020, Magenta Manufacturing Company discovered that construction cost had been capitalized as a cost of the factory building in 2015 when it should have been treated as a cost of production equipment installation costs. As a result of the misclassification, the depreciation through 2018 was understated by 110,000, and depreciation for 2019 was understated by 90,000. What would be the consequences of correcting for the misclassification of the property cost? a. The taxpayer uses the FIFO inventory method, and 25% of goods produced during the period were included in the ending inventory. b. The taxpayer uses the LIFO inventory method, and no new LIFO layer was added during 2019.Shannon Corporation began operations on January 1, 2019. Financial statements for the years ended December 31, 2019 and 2020, contained the following errors: In addition, on December 31, 2020, fully depreciated machinery was sold for 10,800 cash, but the sale was not recorded until 2021. There were no other errors during 2019 or 2020, and no corrections have been made for any of the errors. Refer to the information for Shannon Corporation above. Ignoring income taxes, what is the total effect of the errors on the amount of working capital (current assets minus current liabilities) at December 31, 2020? a. working capital overstated by 4,200 b. working capital understated by 5,800 c. working capital understated by 6,000 d. working capital understated by 9,800
- During 2019, White Company determined that machinery previously depreciated over a 7-year life had a total estimated useful life of only 5 years. An accounting change was made in 2019 to reflect the change in estimate. If the change had been made in 2018, accumulated depreciation at December 31, 2018, would have been 1,600,000 instead of 1,200,000. As a result of this change, the 2019 depreciation expense was 100,000 greater than it would have been if no change were made. Ignoring income tax considerations, what is the proper amount of the adjustment to Whites January 1, 2019, balance of retained earnings? a. 0 b. 100,000 c. 280,000 d. 400,000Kam Company purchased a machine on January 2, 2019, for 20,000. The machine had an expected life of 8 years and a residual value of 300. The double-declining-balance method of depreciation is used. Required: 1. Compute the depreciation expense for each year of the assets life and book value at the end of each year. 2. Assuming that the company has a policy of always changing to the straight-line method at the midpoint of the assets life, compute the depreciation expense for each year of the assets life. 3. Assuming that the company always changes to the straight-line method at the beginning of the year when the annual straight-line amount exceeds the double-declining-balance amount, compute the depreciation expense for each year of the assets life.During 2019, Ryel Companys controller asked you to prepare correcting journal entries for the following three situations: 1. Machine A was purchased for 50,000 on January 1, 2014. Straight-line depreciation has been recorded for 5 years, and the Accumulated Depreciation account has a balance of 25,000. The estimated residual value remains at 5,000, but the service life is now estimated to be 1 year longer than estimated originally. 2. Machine B was purchased for 40,000 on January 1, 2017. It had an estimated residual value of 5,000 and an estimated service life of 10 years. it has been depreciated under the double-declining-balance method for 2 years. Now, at the beginning of the third year, Ryel has decided to change to the straight-line method. 3. Machine C was purchased for 20,000 on January 1, 2018, Double-declining-balance depreciation has been recorded for 1 year. The estimated residual value of the machine is 2,000 and the estimated service life is 5 years. The computation of the depreciation erroneously included the estimated residual value. Required: Prepare any necessary correcting journal entries for each situation. Also prepare the journal entry necessary for each situation to record depreciation expense for 2019.
- Soon after December 31, 2019, the auditor requested a depreciation schedule for trucks of Jarrett Trucking Company, showing the additions, retirements, depreciation, and other data affecting the income of the company in the 4-year period 2016 to 2019, inclusive. The following data were in the Trucks account as of January 1, 2016: The Accumulated DepreciationTrucks account, previously adjusted to January 1,2016, and duly entered in the ledger, had a balance on that date of 16,460. This amount represented the straight-line depreciation on the four trucks from the respective dates of purchase, based on a 5-year life and no residual value. No debits had been made to this account prior to January 1, 2016. Transactions between January 1,2017, and December 31, 2019, and their record in the ledger were as follows: 1. July 1, 2016: Truck no. 1 was sold for 1,000 cash. The entry was a debit to Cash and a credit to Trucks, 1,000. 2. January 1, 2017: Truck no. 3 was traded for a larger one (no. 5) with a 5-year life. The agreed purchase price was 12,000. Jarrett paid the other company 1,780 cash on the transaction. The entry was a debit to Trucks, 1,780, and a credit to Cash, 1,780. 3. July 1, 2018: Truck no. 4 was damaged in a wreck to such an extent that it was sold as junk for 50 cash. Jarrett received 950 from the insurance company. The entry made by the bookkeeper was a debit to Cash, 1,000, and credits to Miscellaneous Revenue, 50, and Trucks, 950, 4. July 1, 2018: A new truck (no. 6) was acquired for 20,000 cash and debited at that amount to the Trucks account. The truck has a 5-year life. Entries for depreciation had been made at the close of each year as follows: 2016, 8,840; 2017, 5,436; 2018, 4,896; 2019, 4,356. Required: 1. Next Level For each of the 4 years, calculate separately the increase or decrease in earnings arising from the companys errors in determining or entering depreciation or in recording transactions affecting trucks. 2. Prove your work by one compound journal entry as of December 31, 2019; the adjustment of the Trucks account is to reflect the correct balances, assuming that the books have not been closed for 2019.At the beginning of 2020, Holden Companys controller asked you to prepare correcting entries for the following three situations: 1. Machine X was purchased for 100,000 on January 1, 2015. Straight-line depreciation has been recorded for 5 years, and the Accumulated Depreciation account has a balance of 45,000. The estimated residual value remains at 10,000, but the service life is now estimated to be 1 year longer than originally estimated. 2. Machine Y was purchased for 40,000 on January 1, 2018. It had an estimated residual value of 4,000 and an estimated service life of 8 years. It has been depreciated under the sum-of-the-years-digits method for 2 years. Now, the company has decided to change to the straight-line method. 3. Machine Z was purchased for 80,000 on January 1, 2019. Double-declining-balance depreciation has been recorded for 1 year. The estimated residual value is 8,000 and the estimated service life is 5 years. The computation of the depreciation erroneously included the estimated residual value. Required: Prepare any necessary correcting journal entries for each situation. Also prepare the journal entry for each situation to record the depreciation for 2020. Ignore income taxes.Hathaway Company purchased a copying machine for 8,700 on October 1, 2019. The machines residual value was 500 and its expected service life was 5 years. Hathaway computes depreciation expense to the nearest whole month. Required: 1. Compute depredation expense (rounded to the nearest dollar) for 2019 and 2020 using the: a. straight-line method b. sum-of-the-years-digits method c. double-declining-balance method 2. Next Level Which method produces the highest book value at the end of 2020? 3. Next Level Which method produces the highest charge to income in 2020? 4. Next Level Over the life of the asset, which method produces the greatest amount of depreciation expense?
- 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?In 2024, internal auditors discovered that PKE Displays, Incorporated, had debited an expense account for the $402,000 cost of a machine purchased on January 1, 2021. The machine’s useful life was expected to be six years with no residual value. Straight-line depreciation is used by PKE. Ignoring income taxes, prepare the journal entry PKE will use to correct the error (before adjusting and closing entries). Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.In 2024, internal auditors discovered that PKE Displays, Incorporated, had debited an expense account for the $350,000 cost of a machine purchased on January 1, 2021. 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, prepare the journal entry PKE will use to correct the error (before adjusting and closing entries). Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.