Prepare the journal entries necessary in 2021 to correct the books, assuming that the books have not been closed. Disregard effects of corrections on income tax.
Prepare the journal entries necessary in 2021 to correct the books, assuming that the books have not been closed. Disregard effects of corrections on income tax.
College Accounting, Chapters 1-27
23rd Edition
ISBN:9781337794756
Author:HEINTZ, James A.
Publisher:HEINTZ, James A.
Chapter7: Accounting For Cash
Section: Chapter Questions
Problem 1SEB: CHECKING ACCOUNT TERMS Match the following words with their definitions:
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Question
The first audit of the books of Sweet Company was made for the year ended December 31, 2021. In examining the books, the auditor found that certain items had been overlooked or incorrectly handled in the last 3 years. These items are:
1. | At the beginning of 2019, the company purchased a machine for $534,000 (salvage value of $53,400) that had a useful life of 6 years. The bookkeeper used straight-line |
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2. | At the end of 2020, the company failed to accrue sales salaries of $42,000. | |
3. | A tax lawsuit that involved the year 2019 was settled late in 2021. It was determined that the company owed an additional $90,000 in taxes related to 2019. The company did not record a liability in 2019 or 2020 because the possibility of loss was considered remote, and charged the $90,000 to a loss account in 2021. | |
4. | Sweet Company purchased a copyright from another company early in 2019 for $54,000. Sweet had not amortized the copyright because its value had not diminished. The copyright has a useful life at purchase of 20 years. | |
5. | In 2021, the company wrote off $81,000 of inventory considered to be obsolete; this loss was charged directly to |
Prepare the
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