Question

Correcting Journal Entries for Errors Instructions Chart of Accounts General Journal Instructions a. In January 2016, repair costs of $10,320 were debited to the Machinery account. At the beginning of 2016, the book value of the machinery was $85,800. No residual value is expected, the remaining estimated life is 10 years, and straight-line depreciation is used. b. All purchases of materials for construction contracts still in progress have been immediately expensed. It is discovered that the use of these materials was $9,560 during 2015 and $12,370 during 2016 c. Depreciation on manufacturing equipment has been excluded from manufacturing costs and treated as a period expense. During 2016, $44,500 of depreciation was accounted for in that manner. Production was 14,800 units during 2016, of which 1,480 remained in inventory at the end of the year. Assume there was no inventory at the beginning of 2016. Required Prepare journal entries for the preceding errors discovered during 2017. Ignore income taxes.

Answer 1

SOLUTION

S.No.	Accounts titles and explanation	Debit ($)	Credit ($)
1.	Retained earnings	9,288
	Accumulated depreciation (already accounted at 1/10th)	1,032
	Machinery		10,320
2.	Capital work in progress (9,560 + 12,370)	21,930
	Retained earnings		21,930
3.	Cost of goods sold	4,450
	Retained earnings (44,500*1,480 / 14,800)		4,450