On September 30, 2022, the company sold old equipment for $96,600. The equipment was purchased on January 1, 2020, for 201,600 and was estimated to have a $33,600 salvage value at the end of its 5-year life. Depreciation on the equipment has been ecorded through December 31, 2021. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry for the account titles and enter O for the amounts.) Account Titles and Explanation te 30,2022 Depreciation Expense Accumulated Depreciation-Equipment (To record depreciation expense for the first 9 months of 2022) Cash Accumulated Depreciation-Equipment Loss on Disposal of Plant Assets Equipment (To recorte Debit 25200 DOOG 96600 Credit 25200 100 45000 109200

On September 30, 2022, the company sold old equipment for $96,600. The equipment was purchased on January 1, 2020, for 201,600 and was estimated to have a $33,600 salvage value at the end of its 5-year life. Depreciation on the equipment has been ecorded through December 31, 2021. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry for the account titles and enter O for the amounts.) Account Titles and Explanation te 30,2022 Depreciation Expense Accumulated Depreciation-Equipment (To record depreciation expense for the first 9 months of 2022) Cash Accumulated Depreciation-Equipment Loss on Disposal of Plant Assets Equipment (To recorte Debit 25200 DOOG 96600 Credit 25200 100 45000 109200

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter22: Accounting For Changes And Errors.

Section: Chapter Questions

Problem 9P: At the end of 2020, while auditing Sandlin Companys books, before the books have been closed, you...

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At the end of 2020, while auditing Sandlin Companys books, before the books have been closed, you find the following items: a. A building with a 30-year life (no residual value, depreciated using the straight-line method) was purchased on January 1, 2020, by issuing a 90,000 non-interest-bearing, 4-year note. The entry made to record the purchase was a debit to Building and a credit to Notes Payable for 90,000; 12% is a fair rate of interest on the note. b. The inventory at the end of 2020 was found to be overstated by 15,000. At the same time, it was discovered that the inventory at the end of 2019 had been overstated by 35,000. The company uses the perpetual inventory system. c. For the last 3 years, the company has failed to accrue salaries and w-ages. The correct amounts at the end of each year were: 2018, 12,000; 2019, 18,000; and 2020, 10,000. Required: 1. Prepare journal entries to correct the errors. Ignore income taxes. 2. Assume, instead, that the company discovered the errors after it had closed the books. Prepare journal entries to correct the errors. Ignore income taxes.
Ivanhoe Company owns equipment that cost $64,560 when purchased on January 1, 2019. It has been depreciated using the straight- line method based on estimated salvage value of $4,920 and an estimated useful life of 5 years. Prepare Ivanhoe Company's journal entries to record the sale of the equipment in these four independent situations. (List all debit entries before credit entries. Credit account tities are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) (a) (b) (c) (d) No. Account Titles and Explanation (a) Sold for $30,784 on January 1, 2022. Sold for $30,784 on May 1, 2022. Sold for $10,100 on January 1, 2022. Sold for $10,100 on October 1, 2022. (b) Cash Accumulated Depreciation Equipment Gain on Disposal of Plant Assets Equipment Accumulated Depreciation Equipment Gain on Disposal of Plant Assets (To record depreciation) Cash Accumulated Depreciation Equipment…
Sheridan Company owns equipment that cost $68,520 when purchased on January 1, 2019. It has been depreciated using the straight- line method based on estimated salvage value of $6,000 and an estimated useful life of 5 years. Prepare Sheridan Company's journal entries to record the sale of the equipment in these four independent situations. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) (a) Sold for $32,512 on January 1, 2022. (b) Sold for $32,512 on May 1, 2022. (c) Sold for $10,100 on January 1, 2022. (d) Sold for $10,100 on October 1, 2022. No. Account Titles and Explanation Debit Credit (a) (b) (To record depreciation) (To record sale of equipment) (c) (d) (To record depreciation) (To record sale of equipment)
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On July 1, 2019, Blossom Company purchased new equipment for $70,000. Its estimated useful life was 5 years with a $8,000 salvage value. On December 31, 2022, the company estimated that the equipment’s remaining useful life was 10 years, with a revised salvage value of $5,000. Prepare the journal entry to record depreciation on December 31, 2019. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Debit Credit enter an account title enter a debit amount enter a credit amount enter an account title enter a debit amount enter a credit amount Prepare the journal entry to record depreciation on December 31, 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and…
Jackson Company purchased $50,000 in equipment on July 1, 2021. The equipment had a 10-year useful life (no salvage value) and Jackson normally uses the straight-line method of depreciation with no special first year conventions. The equipment was written off to office expense when purchased, but the error was not discovered until near the end of 2022 (this year is still open). What is the effect of the error on the 2021 and 2022 net income? OA OB OC OD 2021 net income Too high $50.000 2021 net income Too low $50,000 2021 net income Too high $45,000 2021 net income Too low $47,500 2022 net income Too high $5,000 2022 net income Too low $5,000 Lerner 2022 net income Too low $5,000 2022 net income Too high $5,000
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Prepare the journal entries to record the following transactions for Sunland Wholesale Company, which has a calendar year end and uses the straight-line method of depreciation. Your answer is partially correct. On September 30, 2028, the company sold old equipment for $42,800. The equipment was purchased on January 1, 2026 for $89,400 and was estimated to have a $14,100 salvage value at the end of its 5-year life. Depreciation on the equipment has been recorded through December 31, 2027. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.) Account Titles and Explanation Date September 30, 2028 September 30, 2028 Depreciation Expense Accumulated Depreciation-Equipment (To record depreciation expense for the first 9 months of 2028) Cash Accumulated Depreciation-Equipment Loss on Disposal of Plant…
Equipment was purchased on January 2, 2020, for $24,000, but no portion of the cost has been charged to depreciation. The corporation wishes to use the straight-line method for these assets, which have been estimated to have a life of 10 years and no salvage value. What effect does this error have on net income in 2020? What entry is necessary to correct for this error, assuming that the books are not closed for 2020?
On January 1, 2019, Uptown Builders purchased a machine for $200,000. Uptown's policy is to depreciate this type of machinery using straight-line depreciation, over five years, with no residual value. Because of a bookkeeping error, no depreciation was recognized in Uptown's 2019 or 2020 financial statements. The error was discovered during the preparation of the 2021 financial statements. Ignoring income taxes, the impact of this error on retained earnings prior to any 2021 adjustments is: Question 8 options: Overstatement of $80,000 Understatement of $120,000 Understatement of $80,000 Overstatement of $120,000
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