A three-year fire insurance policy beginning on September 1, 2018, was erroneously debited to the Land account when the $720 premium was paid. During 2020 the company sold all its land, reducing the Land account to a zero balance. Using the amount recorded in the Land account, the company suffered a $400 loss on the sale. Instructions: Prepare two correcting entries Assuming that the books have not been closed in 2020 Assuming that the books have been closed for 2020.
A three-year fire insurance policy beginning on September 1, 2018, was erroneously debited to the Land account when the $720 premium was paid. During 2020 the company sold all its land, reducing the Land account to a zero balance. Using the amount recorded in the Land account, the company suffered a $400 loss on the sale. Instructions: Prepare two correcting entries Assuming that the books have not been closed in 2020 Assuming that the books have been closed for 2020.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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A three-year fire insurance policy beginning on September 1, 2018, was erroneously debited to the Land account when the $720 premium was paid. During 2020 the company sold all its land, reducing the Land account to a zero balance. Using the amount recorded in the Land account, the company suffered a $400 loss on the sale.
Instructions: Prepare two correcting entries
-
Assuming that the books have not been closed in 2020
-
Assuming that the books have been closed for 2020.
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