On December 12, 2016, an investment costing $80,000 was sold for $100,000. The total of the sale proceeds was credited to the investment account. Required: 1. Prepare the journal entry to correct the error assuming it is discovered before the books are adjusted or closed in 2016. (Ignore income taxes.) 2. Prepare the journal entry to correct the error assuming it is not discovered until early 2017. (Ignore income taxes.)

On December 12, 2016, an investment costing $80,000 was sold for $100,000. The total of the sale proceeds was credited to the investment account. Required: 1. Prepare the journal entry to correct the error assuming it is discovered before the books are adjusted or closed in 2016. (Ignore income taxes.) 2. Prepare the journal entry to correct the error assuming it is not discovered until early 2017. (Ignore income taxes.)

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter22: Accounting For Changes And Errors.

Section: Chapter Questions

Problem 15E: The following are independent errors: a. In January 2019, repair costs of 9,000 were debited to the...

See similar textbooks

Similar questions

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.
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
On December 12, 2018, an investment costing $80,000 was sold for $100,000. The total of the sale proceeds wascredited to the investment account.Required:1. Prepare the journal entry to correct the error, assuming it is discovered before the books are adjusted orclosed in 2018. (Ignore income taxes.)
On December 12, 2021, an equity investment costing $80,000 was sold for $100,000. The investment was carried in the balance sheet at $75,000, and was accounted for under the equity method. An error was made in which the total of the sale proceeds was credited to the investment account.Required:1. Prepare the journal entry to correct the error assuming it is discovered before the books are adjusted or closed in 2021. (Ignore income taxes.)2. Prepare the journal entry to correct the error assuming it is not discovered until early 2022. (Ignore income taxes.)
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?
When DeSoto Water Works purchased a machine at the end of 2017 at a cost of $65,000, the company debitedBuildings and credited Cash $65,000. The error was discovered in 2018. What journal entry will DeSoto use tocorrect the error? What other step(s) would be taken in connection with the error?
In 2016, internal auditors discovered that PKE Displays, Inc., had debited an expense account for the $350,000 cost of equipment purchased on January 1, 2013. The equipment’s life was expected to be five years with no residual value. Straight-line depreciation is used by PKE. Required: 1. Prepare the appropriate correcting entry assuming the error was discovered in 2016 before the adjusting and closing entries. (Ignore income taxes.) 2. Assume the error was discovered in 2018 after the 2017 financial statements are issued. Prepare the appropriate correcting entry.
In 2018, internal auditors discovered that PKE Displays, Inc. had debited an expense account for the $350,000cost of equipment purchased on January 1, 2015. The equipment’s life was expected to be five years with no residual value. Straight-line depreciation is used by PKE.Required:1. Prepare the correcting entry assuming the error was discovered in 2018 before the adjusting and closingentries. (Ignore income taxes.)2. Assume the error was discovered in 2020 after the 2019 financial statements are issued. Prepare the correcting entry
In 2016, internal auditors discovered that PKE Displays, Inc., had debited an expense account for the $350,000 cost of a machine purchased on January 1, 2013. 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?
In 2017, Marigold Company discovered that equipment purchased on January 1, 2016, for $55,100 was expensed at that time. The equipment should have been depreciated over 6 years using the straight-line method, with a $6,500 value. The effective tax rate is 40%. Prepare Marigold’s 2017 journal entry to correct the error
The following information applies to the questions displayed below.] On April 1, 2016, Cyclone's Backhoe Co. purchases a trencher for $312,000. The machine is expected to last five years and have a salvage value of $56,000. Compute depreciation expense for both years ending December 2016 and 2017 assuming the company uses the double-declining-balance method. (Enter all amounts positive values.)
On January 2, 2016, King Pet purchased fixtures for $60,4000 cash, expecting the fixtures to remain in service for eight years. King Pet has depreciated the fixtures on a straight-Line basis, with $10,000 residual value. On April 30, 2018, King Pet sold the fixtures for $39,200 cash. Record both depreciation expense for 2018 and sale of the fixtures on April 30, 2018. (Assume the modified half-month convention is used. Record debits first, then credits. Select the explanation on the last line of the journal entry table.)