Question

ending December 31, 2017. Assume a tax rate of 40 percent. the asset as an epense, the 2. The 3. The company recorded advances of $10,500 to employees made December 31, 2017 as Salaries and Wages Expense. 4. Dividends of $10,500 during 2017 were recorded as an operating expense. cost method. The new inventory method would have resulted in an additional $123,750 of cost of goods sold (before taxes) being reported on prior years ncome statement.

Answer 1

Items	Description	Increase or (Decrease) to income from continuing operations
1	Need to put all $52,100 into Equipment account and take out of supplies expense account. Also take depreciation of $17,370 for the year.
		$34,740
	Net effect is to increase income by $34,740
2	Discontinued Items reported after Income from continuing operations
		No Effect
3	Correct with
	Dr: Adances to Employees	$15,000
	Cr: Salaries and Wages Expense
4	Dividends are not reported on the Income Statement, should be on statement of R/E	$10,500
5	Change in inventory method: Current year reported correctly on income statement, need to adjust beginning R/E
		No Effect
6	Current year is correct. Change in estimate does not need retroactive action.	No Effect