35. An Entity bought an office equipment costing P60,000. It was however, charged to repairs and maintenance. Data about the office machine follows: * Date of Purchase : June 30, 2020 Estimated Life : 5 years Salvage Value none The error was discovered and was corrected on December 31, 2020 during the closing of the books of accounts. How much is the understatement or overstatement of profit for the year ended Dec. 31, 2020, because of the error? O A. P52,000 understatement B. P53,000 overstatement O C. P54,000 understatement O D. P54,000 overstatement

35. An Entity bought an office equipment costing P60,000. It was however, charged to repairs and maintenance. Data about the office machine follows: * Date of Purchase : June 30, 2020 Estimated Life : 5 years Salvage Value none The error was discovered and was corrected on December 31, 2020 during the closing of the books of accounts. How much is the understatement or overstatement of profit for the year ended Dec. 31, 2020, because of the error? O A. P52,000 understatement B. P53,000 overstatement O C. P54,000 understatement O D. P54,000 overstatement

Name: 35. An Entity bought an officeequipment costing P60,000. It washoweve
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Description: 35. An Entity bought an officeequipment costing P60,000. It washowever, charged to repairs andmaintenance. Data about the officemachine follows: *Date of Purchase : June 30, 2020Estimated Life : 5 yearsSalvage ValuenoneThe error was discovered and w

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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Proper net income computation
1
The Laura Company has the following errors on its books as of December 31, 2020. The books for 2020 have not yet been closed. a. In 2020, fully depreciated equipment (with no residual value) that originally cost $8,000 was sold for $700 as scrap. The company credited the $700 proceeds to Equipment. b. On January 1, 2019, the company recorded the purchase of equipment in exchange for a three-year, noninterest-bearing note payable in the amount of $10,000. Interest rates were then 8%, but no recognition was made of this fact. The present value of $1 at 8% for three periods is 0.7938. (Ignore depreciation.) Required: Prepare journal entries to correct these errors at December 31, 2020. Ignore income taxes.
A purchase of machine tools by Jet Co. for $3,920 should have been capitalized as the tools have a 3 year life and an expected residual value of $560. However, Jet Co. erroneously charged the purchase to Repairs & Maintenance Expense. At year-end closing. Jet's bookkeeper noticed the error and made only one correcting entry resulting in Net Income and Total Assets to be understated: Dr Depreciation Expense $3,920/3 Cr Accumulated Depreciation $3,920/3 Required 1: Assuming you fixed all errors, what is the amount of depreciation expense Jet Co. must show on the year end income statement? $[ Required 2: Assuming you fixed all errors, what is the amount for accumulated depreciation Jet Co. must show on the year end balance sheet? (type it as a positive number) $[ Required 3: Assuming you fixed all errors, what net amount (.e.. cost net of accumulated depreciation) should Jet Co. show for tools on the year end balance sheet? $
Your staff person has provided you with the following journal entry for January 20x1 depreciation. The monthly deprecation is supposed to be $100.00. What is wrong with this entry?
A company purchased a computer that cost $10,000, It had an estimated useful life of 5 years and no residual value. The computer was depreciated by the straight-line method and it was sold at the end of the second year of use for $5,000 cash. The company should record:
On August 1 of year 0, Dirksen purchased a machine for $23,750 to use in its business. On December 4 of year 0, Dirksen sold the machine for $21,500. Use MACRS Table. Note: Loss amounts should be indicated by a minus sign. Do not round percentages used for calculations. Round other intermediate computations to the nearest whole dollar amount. Leave no answers blank. Enter zero if applicable. b. Dirksen depreciated the machinery using MACRS (seven-year recovery period). What are the amount and character of the gain or loss Dirksen will recognize on the sale if the machine is sold on January 15 of year 1 instead?
None
Muscat Bakery LLC bought a Toyota Hiace Van for its business in July 2018. The cost of the Van is RO 12000 and the useful life is 5 years. The depreciated was provided in the accounts using Declining Balance method. The company sells the van on 31 Dec 2020 for RO 6000. The amount of Profit /loss to the transferred to the Income statement will be a. RO 120 Loss b. RO 1728 Profit c. RO 912 Profit d. RO 912 Loss
The ledger of Hillsboro Rental Agency on March 31 of the current year includes the following selected accounts before adjusting entries have been prepared. Assume no adjusting entries were made in Januaray or February either. Prepaid Insurance Supplies Equipment Accumulated Depreciation- Equipment Notes Payable Unearned Rent Revenue Rent Revenue Interest Expense Salaries and Wages Expense Debit $ 3,600 3,053 26,200 -0- 15,330 Credit $ 8,921 20,600 7,500 54,170