In 2018, internal auditors discovered that PKE Displays, Inc.,
had debited an expense account for the $264,000 cost of a machine
purchased on January 1, 2015. The machine’s useful life was
expected to be four years with no residual value. Straight-line
depreciation is used by PKE.
Ignoring 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.)
Account | Debit | Credit |
Equipment | 264,000 | |
Accumulated Depreciation | 198,000 | |
Retained earnings | 66,000 |
Accumulated Depreciation = (264,000-0)/4 * 3 years
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