The first audit of the books of Sheridan 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. 2. 3. 4. 5. At the beginning of 2019, the company purchased a machine for $537,000 (salvage value of $53,700) that had a useful life of 6 years. The bookkeeper used straight-line depreciation but failed to deduct the salvage value in computing the depreciation base for the 3 years. At the end of 2020, the company failed to accrue sales salaries of $43,000. A tax lawsuit that involved the year 2019 was settled late in 2021. It was determined that the company owed an additional $86,000 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 $86,000 to a loss account in 2021. Sheridan Company purchased a copyright from another company early in 2019 for $54,000. Sheridan had not amortized the copyright because its value had not diminished. The copyright has a useful life at purchase of 20 years. In 2021, the company wrote off $92,000 of inventory considered to be obsolete; this loss was charged directly to Retained Earnings. 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. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Round answers to 0 decimal places, eg, 1250.) No. Account Titles and Explanation No. Account Titles and Explanation Debit corrections on income tax. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry for the account titles and enter O for the amounts. Round answers to 0 decimal places, e.g. 1250.) 1. Credit Debit Credit

The first audit of the books of Sheridan 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. 2. 3. 4. 5. At the beginning of 2019, the company purchased a machine for $537,000 (salvage value of $53,700) that had a useful life of 6 years. The bookkeeper used straight-line depreciation but failed to deduct the salvage value in computing the depreciation base for the 3 years. At the end of 2020, the company failed to accrue sales salaries of $43,000. A tax lawsuit that involved the year 2019 was settled late in 2021. It was determined that the company owed an additional $86,000 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 $86,000 to a loss account in 2021. Sheridan Company purchased a copyright from another company early in 2019 for $54,000. Sheridan had not amortized the copyright because its value had not diminished. The copyright has a useful life at purchase of 20 years. In 2021, the company wrote off $92,000 of inventory considered to be obsolete; this loss was charged directly to Retained Earnings. 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. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Round answers to 0 decimal places, eg, 1250.) No. Account Titles and Explanation No. Account Titles and Explanation Debit corrections on income tax. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry for the account titles and enter O for the amounts. Round answers to 0 decimal places, e.g. 1250.) 1. Credit Debit Credit

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 9P: At the end of 2020, while auditing Sandlin Companys books, before the books have been closed, you...

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