During 2021, a $50,000 loss on the sale of machinery was incorrectly recorded as a factory equipment repair. The error was not discovered until the books were closed and the financial statements were issued for 2022. What adjustment is necessary? Group of answer choices No adjustment is necessary to books or financial statements. Make no entry, but if $50,000 is a material amount, retrospectively adjust the 2021 comparative income statement. Since only income statement accounts are affected, make no entry to the books but recall the 2021 income statement. Record a correction to the books for 2021 and 2022 and recall prior financial statements

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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During 2021, a $50,000 loss on the sale of machinery was incorrectly recorded as a factory equipment repair. The error was not discovered until the books were closed and the financial statements were issued for 2022. What adjustment is necessary?
Group of answer choices
No adjustment is necessary to books or financial statements.
Make no entry, but if $50,000 is a material amount, retrospectively adjust the 2021 comparative income statement.
Since only income statement accounts are affected, make no entry to the books but recall the 2021 income statement.
Record a correction to the books for 2021 and 2022 and recall prior financial statements
 
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