Conrad Playground Supply underwent a restructuring in 2018. The
company conducted a thorough internal audit, during which the
following facts were discovered. The audit occurred during 2018
before any adjusting entries or closing entries are
prepared.
Retained earnings | 1,100 | |
Common stock | 1,100 | |
The shares had a market price at the time of $13 per share.
Interest expense | 129,000 | |
Cash | 129,000 | |
Required:
For each error, prepare any journal entry necessary to correct the
error as well as any year-end adjusting entry for 2018 related to
the situation described. (Ignore income taxes.) (If no
entry is required for a transaction/event, select "No journal entry
required" in the first account field.)
Transactions | General Journal | Debit | Credit |
a(1) | Equipment | $40,500 | |
Accumulated depreciation ($40,500/5 =$8,100 ×2 = $16,200) | $16,200 | ||
Retained earnings | $24,300 | ||
(Being Equipment recorded) | |||
a(2) | Depreciation expense | $8,100 | |
Accumulated depreciation | $8,100 | ||
(Being depreciation expense recorded) | |||
b(1) | Cash | $12,500 | |
Office supplies | $12,500 | ||
(Being entry reversed which was recorded wrong) | |||
b(2) | Tools | $12,500 | |
Cash | $12,500 | ||
(Being correct entry recorded for tools paid) |
|||
c(1) | Inventory | $69,000 | |
Retained earnings | $69,000 | ||
(Being inventory was understated, now correctly recorded) | |||
c(2) | No Journal entry required | ||
d(1) | Retained earnings (1100 × $13 =$14,300 - $1100 =$13,200) | $13,200 | |
Paid in capital - ecxess of par | $13,200 | ||
(Being retained earnings recorded) | |||
d(2) | No Journal entry required | ||
e(1) | Retained earnings | $86,000 | |
Interest expense | $86,000 | ||
(Being interest expense accrued) | |||
e(2) | Interest expense | $86,000 | |
Interest payable | $86,000 | ||
(Being interest expense recorded) | |||
f(1) | Prepaid insurance ($69,300/3 =$23,100 ×2 = | $46,200 | |
Retained earnings | $46,200 | ||
(Being prepaid insurance recorded) | |||
f(2) | Insurance expense | $23,100 | |
Prepaid insurance | $23,100 | ||
Being insurance expense recorded) |
Conrad Playground Supply underwent a restructuring in 2018. The company conducted a thorough internal audit, during...
Problem 20-15 Correction of errors, six errors [LO20-6] Conrad Playground Supply underwent a restructuring in 2018. The company conducted a thorough internal audit, during which the following facts were discovered. The audit occurred during 2018 before any adjusting entries or closing entries are prepared. a. Additional computers were acquired at the beginning of 2016 and added to the company's office network. The $49,000 cost of the computers was inadvertently recorded as maintenance expense. Computers have five-year useful lives and no...
Problem 20-15 Correction of errors, six errors [LO20-6] Conrad Playground Supply underwent a restructuring in 2018. The company conducted a thorough internal audit, during which the following facts were discovered. The audit occurred during 2018 before any adjusting entries or closing entries are prepared. a. Additional computers were acquired at the beginning of 2016 and added to the company's office network. The $49,000 cost of the computers was inadvertently recorded as maintenance expense. Computers have five-year useful lives and no...
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