Homework Answers
1.) Incorrect entry which was made :-
| Accounts | Debit | Credit |
| Equipment | $5,000 | |
| Cash | $5,000 |
Correct entry that the accountant should have made :-
| Accounts | Debit | Credit |
| Repair and maintenance | $5,000 | |
| Cash | $5,000 |
2.) This error increases the net income by $5,000 (ignoring depreciation and taxation effect).
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firm’s accountant found that the entry for depreciation expense had
been omitted in 2016. In addition, management has informed the
accountant that the company plans to switch to straight-line
depreciation, starting with the year 2018. At present, the company
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In 2018, the internal auditors of KJI Manufacturing discovered
the following material errors made in prior years:
Equipment was purchased on June 30, 2016, for $175,000. The
purchase was incorrectly recorded as a debit to repair and
maintenance expense. The equipment has a useful life of five years
and no residual value.
On March 31, 2017, $40,000 was paid to a contractor to
landscape the area around a manufacturing plant including the
installation of a sprinkler system. The expenditure...
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Stellar Co. purchased a equipment on January 1, 2015, for
$610,500. At that time, it was estimated that the equipment would
have a 10-year life and no salvage value. On December 31, 2018, the
firm’s accountant found that the entry for depreciation expense had
been omitted in 2016. In addition, management has informed the
accountant that the company plans to switch to straight-line
depreciation, starting with the year 2018. At present, the company
uses the sum-of-the-years’-digits method for depreciating
equipment....
a. Barga Company purchases $31,000 of equipment on January 1, 2017. The equipment is expected to last five years and be worth $4,200 at the end of that time. b. Welch Company purchases $11,100 of land on January 1, 2017. The land is expected to last indefinitely Prepare the entries to record one year's depreciation expense of $5,360 for the equipment and what depreciation adjustment, if any, should be made with respect to the Land account as of December 31,...
a. Barga Company purchases $31,000 of equipment on January 1, 2017. The equipment is expected to last five years and be worth $4,200 at the end of that time. b. Welch Company purchases $11,100 of land on January 1, 2017. The land is expected to last indefinitely. Prepare the entries to record one year's depreciation expense of $5,360 for the equipment and what depreciation adjustment, if any, should be made with respect to the Land account as of December 31,...
Collins Corporation purchased office equipment at the beginning of 2019 and capitalized a cost of $1,938,000. This cost figure included the following expenditures: Purchase price Freight charges Installation charges Annual maintenance charge Total $1,790,000 24,000 14,000 110,000 $1,938,000 The company estimated an eight-year useful life for the equipment. No residual value is anticipated. The double declining balance method was used to determine depreciation expense for 2019 and 2020. In 2021, after the 2020 financial statements were issued, the company decided...
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