Question

In 2023, after the 2022 financial statements were issued, internal auditors discovered that PKE Displays, Inc., had debited an expense account for the $350,000 cost of a machine purchased on January 1, 2018. The machine'ss useful life was expected to be five years with no residual value. Straight-line depreciation is used by PKE gnoring income taxes, prepare the journal entry PKE will use to correct the error. (If no entry is required for a transaction/event select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet Record journal entry to correct error Note: Enter debits before credits.

Answer 1

$ 390000 In 2018 Expenses Cash / Band $390006 due to this expenditure was over stated by, 6350000 Overstatement of expenditure will lead to under statement of net Income and subsequently retained earnings. - If the asset is recorded then we can claim a depreciation of $70000 in 2018 [ 350000 7 Under statement of depreciation expensl. Net understatement of Net income in 2018 is 280000 we have not claimed depreciation of $70000 in 2019, 2020 2021 and 2022 - 4 years UX 70000 - 200000. awe due to this profits of that respective years will be over steeled by 870000. In toteil - 280000 . Both the undelist atement of Net Income by 8260000 in 2018 and accumulated over statement of $480000 in 4 years & will be set off. No entry required in 2023 to connect the essor.