In 2017, the new CEO of Watsontown Electric Supply became concerned about the company’s apparently deteriorating financial position. Wishing to make certain that the grim monthly reports he was receiving from the company’s bookkeeper were accurate, the CEO engaged a CPA firm to examine the company’s financial records. The CPA firm discovered the following facts during the course of the engagement, which was completed prior to any adjusting or closing entries being prepared for 2017.
DR Vehicle Expense | $ | 18,000 | |||||
CR Cash | $ | 18,000 | |||||
Required:
Prepare any journal entry necessary to correct each error as well as any year-end adjusting entry for 2017 related to the described situation. Ignore income tax effects. (If no entry is required for a particular transaction, select "No journal entry required" in the first account field.)
1) | Digital imaging system | 5000 | |
Retained earnings | 5000 | ||
[To rectify the error occurred in 2016] | |||
Retained earnings [5000/(4*2)] | 625 | ||
Accumulated depreciation-Digital imaging system | 625 | ||
[Depreciation expense for 2016 on half year convention] | |||
Depreciation expense-Digital imaging system (5000/4) | 1250 | ||
Accumulated depreciation-Digital imaging system | 1250 | ||
[To record depreciation for 2017] | |||
2) | Truck | 18000 | |
Vehicle expense | 18000 | ||
[To rectify the error] | |||
Depreciation expense-Truck {18000/(2*3) | 3000 | ||
Accumulated depreciation-Truck | 3000 | ||
{To record depreciation for 2017] | |||
3) | Prepaid rent | 18000 | |
Buildings | 18000 | ||
[To rectify error] | |||
Rent expense [18000*6/12] | 9000 | ||
Prepaid rent | 9000 | ||
[To record expired rent] | |||
4) | Retained earnings | 23500 | |
Bad debts expense | 23500 | ||
[To rectify the error] | |||
5) | Prepaid insurance (30000*2/3) | 20000 | |
Retained earnings | 20000 | ||
[To rectify the error] | |||
Insurance expense | 10000 | ||
Prepaid insurance | 10000 | ||
[To record expense for 2017] | |||
6) | Retained earnings (8000*3/12) | 2000 | |
Interest expense | 2000 | ||
[To rectify the error] | |||
Interest expense [8000*9/12] | 6000 | ||
Interest payable | 6000 | ||
[To record interest accrual for 2017] |
In 2017, the new CEO of Watsontown Electric Supply became concerned about the company’s apparently deteriorating...
In 2017, the new CEO of Watsontown Electric Supply became concerned about the company’s apparently deteriorating financial position. Wishing to make certain that the grim monthly reports he was receiving from the company’s bookkeeper were accurate, the CEO engaged a CPA firm to examine the company’s financial records. The CPA firm discovered the following facts during the course of the engagement, which was completed prior to any adjusting or closing entries being prepared for 2017. A new digital imaging system...
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In 2017, the new CEO of Watsontown Electric Supply became concerned about the company's apparently position. Wishing to make certain that the grim monthly reports he was receiving from the bookkeeper were accurate, the s financial records. The CPA firm discovered the following facts during the course of prior to any adjusting or closing entries being for 2017 t. A new digi ital imaging system was acquired on January 5, 2016, at a cost...
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. Additional computers were acquired at the beginning of 2016 and added to the company’s office network. The $40,500 cost of the computers was inadvertently recorded as maintenance expense. Computers have five-year useful lives and no material salvage value. This class of equipment is depreciated...
Yoshi Company completed the following transactions and events
involving its delivery trucks.
2016
Jan.
1
Paid $23,515 cash plus $1,785 in sales tax for a new delivery
truck estimated to have a five-year life and a $2,000 salvage
value. Delivery truck costs are recorded in the Trucks
account.
Dec.
31
Recorded annual straight-line depreciation on the truck.
2017
Dec.
31
Due to new information obtained earlier in the year, the
truck’s estimated useful life was changed from five to four...
Cabbage White Map Company's balance sheet at December 31, 2017, reported the following (Click the icon to view the data) Read the requirements Requirement 1. How much of the receivables did Cabbage White expect to collect Stated differently, what was the net realizabie value of these receivable? The net realizable value of these receivables is SL Requirement 2. Joumalize, without explanations, 2018 entries for Cabbage White and post to the Accounts Receivable and Allowance for Bad Debts T-accounts Begin with...
Jarden Company has credit sales of $2,300,000 for year 2017. On December 31, 2017, the company’s Allowance for Doubtful Accounts has an unadjusted credit balance of $18,370. Jarden prepares a schedule of its December 31, 2017, accounts receivable by age. On the basis of past experience, it estimates the percent of receivables in each age category that will become uncollectible. This information is summarized here. December 31, 2017 Accounts Receivable Age of Accounts Receivable Expected Percent Uncollectible $ 460,000 Not...
2. Assume the same facts as in (1) above, except the bookkeeper made the following entry on April 1: Dr. 18,000 Rent expense Cash 18,000 The bookkeeper did not make any adjusting entries related to this amount before December 31. Required: a. Calculate the adjusted ending balance in the Prepaid Rent account and the Rent Expense account at December 31. 18.000 X 13.500 b. Prepare t-accounts showing the April 1 transaction, the adjustment to be made at December 31, and...
Arnez Company’s annual accounting period ends on December 31, 2017. The following information concerns the adjusting entries to be recorded as of that date. The Office Supplies account started the year with a $2,975 balance. During 2017, the company purchased supplies for $12,287, which was added to the Office Supplies account. The inventory of supplies available at December 31, 2017, totaled $2,618. An analysis of the company's insurance policies provided the following facts. Policy Date of Purchase Months of Coverage...
In January 2017, installation costs of $5,800 on new machinery
were charged to Maintenance and Repairs Expense. Other costs of
this machinery of $29,000 were correctly recorded and have been
depreciated using the straight-line method with an estimated life
of 10 years and no salvage value. At December 31, 2018, it is
decided that the machinery has a remaining useful life of 20 years,
starting with January 1, 2018. What entries should be made in 2018
to correctly record transactions...
Question 30
In January 2017, installation costs of $6,500 on new machinery
were charged to Maintenance and Repairs Expense. Other costs of
this machinery of $32,500 were correctly recorded and have been
depreciated using the straight-line method with an estimated life
of 10 years and no salvage value. At December 31, 2018, it is
decided that the machinery has a remaining useful life of 20 years,
starting with January 1, 2018. What entries should be made in 2018
to correctly...