1. Merchandise inventory that cost $620000 is reported on the balance sheet at $690000, the expected selling price less estimated selling costs. The following entry was made to record this increase in value 2. The company is being sued for $500000 by a customer who claims damages for personal injury apparently caused by a defective product. Company attorneys feel extremely confident that the company will have no liability for damages resulting from this situation. Nevertheless the company decides to make the following entry . (D) because the general level of price increased during the current year, Gonzalez Inc determined that there was a $16000 understatement of depreciation expense on its equipment and decided to record it in its accounts. depreciation expense 16000 accumulated depreciation - equipment 16000 (e Because of a “fire sale”,equipment obviously worth $200000 was acquired at a cost of $155000. The following entry was made Equipment 200000 Cash 155000 Sales Revenue 45000
1. Merchandise inventory that cost $620000 is reported on the
2. The company is being sued for $500000 by a customer who claims damages for personal injury apparently caused by a defective product. Company attorneys feel extremely confident that the company will have no liability for damages resulting from this situation. Nevertheless the company decides to make the following entry . (D) because the general level of price increased during the current year, Gonzalez Inc determined that there was a $16000 understatement of
depreciation expense 16000
(e Because of a “fire sale”,equipment obviously worth $200000 was acquired at a cost of $155000. The following entry was made
Equipment 200000
Cash 155000
Sales Revenue 45000
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