Cherokee Company's auditor discovered some errors. No errors were corrected during 2017. The errors are described as follows:(1.) Beginning inventory on January 1, 2017, was understated by $5,000.(2.) A two-year insurance policy purchased on April 30, 2017, in the amount of $30,000 was debited to Prepaid Insurance. No adjustment was made on December 31, 2017, or on December 31, 2018.Required:Prepare appropriate journal entries (assume the 2018 books have not been closed). Ignore income taxes. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Name: Cherokee Company's auditor discovered some errors. No errors were corr
Uploaded: 2024-03-20T06:32:37.000Z
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Description: Cherokee Company's auditor discovered some errors. No errors were corrected during 2017. The errors are described as follows:(1.) Beginning inventory on January 1, 2017, was understated by $5,000.(2.) A two-year insurance policy purchased on April 30

Given errors are: (1.) Beginning inventory on January 1, 2017, was understated by $5,000. (2.) A two-year insurance policy purchased on April 30, 2017, in the amount of $30,000 was debited to Prepaid Insurance. No adjustment was made on December 31, 2017, or on December 31, 2018.1. No journal entry is required for the inventory error. It will have self-corrected by the end of 2017 since the 2016 ending inventory would have been understated by the same amount. 2. Required journal entry is: Date Particulars Debit ($) Credit ($) Dec. 31, 2018 Insurance Expenses 26667 Prepaid Insurance (To record charge of insurance expenses from prepaid insurance) 26667

Answered: Prepare appropriate journal entries…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Cherokee Company's auditor discovered some errors. No errors were corrected during 2017. The errors are described as follows:

(1.) Beginning inventory on January 1, 2017, was understated by $5,000.
(2.) A two-year insurance policy purchased on April 30, 2017, in the amount of $30,000 was debited to Prepaid Insurance. No adjustment was made on December 31, 2017, or on December 31, 2018.

Required:
Prepare appropriate journal entries (assume the 2018 books have not been closed). Ignore income taxes. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

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