Required:A. Prepare the necessary journal entries at December 31, 2021, to record the above information.B. Prepare new comparative income statements to reflect the adjustments required (1) through (4) above.You may ignore income taxes.C. Retained earnings reported for the end of 2020 was $2,416,500 and at the end of 2019 was S2,112,000.Dividends of $60,000 weredeclared in each year. Prepare comparative statements of retained earnings for Lancer Company for 2021and 2020, reflectingappropriate adjustments from items (1)-(4) above, ignoring income taxes. Lancer Company's preliminary income statement for 2021 and its reported income statement for 2020 are given below.202120201,350,000(648,0001702,000(172,500)(162.000367.500Sales Revenues1,320,000(630.000690,000Cost of Goods SoldGross ProfitDepreciationOther Expenses(172,500)(153.000364.500Net IncomeLancer's records reveal the following information:(1) Lancer neglected to record S8,000 of supplies expense at the end of 2020, so the supplies inventory was overstated at the end of 2020.Consequently, the supplies expense computed for 2021 included the additional amount of supplies used in 2020.(2) On 1/1/19, Lancer purchased a machine for $120,000. Although the machine was expected to have an eight-year life, it was erroneouslyexpensed in recording the purchase. The appropriate depreciation method for this machine is double-declining-balance with no residual.(3) At the end of 2021, Lancer decided to change its inventory costing method from the FIFO costing method to the average costing method.An analysis of the accounting records provides the following cost of goods sold amounts under average cost and FIFO:YearFIFOAverage615,000 645,000637,50020192020630,000648,000 675,0002021(4) Lancer acquired a machine on 1/3/19 for $100,000 and estimated its useful life to be 6 years with a salvage value of $10,000. In 2021,after the preliminary statements were prepared, Lancer realized that the machine could be used for an additional 5 years, but that thesalvage value at the end of that time would probably be only $5,000. Straight-line depreciation is being used.

Name: Required:A. Prepare the necessary journal entries at December 31, 202
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Description: Required:A. Prepare the necessary journal entries at December 31, 2021, to record the above information.B. Prepare new comparative income statements to reflect the adjustments required (1) through (4) above.You may ignore income taxes.C. Retained ea

Journal entry:The monetary transaction of the business is recorded in the books of accounts called…

Business

Accounting

A. Prepare the necessary journal entries at December 31, 2021, to record the above information. B. Prepare new comparative income statements to reflect the adjustments required (1) through (4) above. You may ignore income taxes. C. Retained earnings reported for the end of 2020 was $2,416,500 and at the end of 2019 was $2,112,000. Dividends of $60,000 were declared in each year. Prepare comparative statements of retained earnings for Lancer Company for 2021 and 2020, reflecting appropriate adjustments from items (1)-(4) above, ignoring income taxes.

A. Prepare the necessary journal entries at December 31, 2021, to record the above information. B. Prepare new comparative income statements to reflect the adjustments required (1) through (4) above. You may ignore income taxes. C. Retained earnings reported for the end of 2020 was $2,416,500 and at the end of 2019 was $2,112,000. Dividends of $60,000 were declared in each year. Prepare comparative statements of retained earnings for Lancer Company for 2021 and 2020, reflecting appropriate adjustments from items (1)-(4) above, ignoring income taxes.

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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Concept explainers

Financial Transaction Analysis

The transaction analysis is done with the help of the accounting equation. The basic accounting equation is alternatively known as the balance sheet equation is based on the double-entry system which says that for each transaction happening in a business, at least two accounts should be affected I.e. both the debit side and the credit side should be equal. The Accounting Equation is

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Question

Required:
A. Prepare the necessary journal entries at December 31, 2021, to record the above information.
B. Prepare new comparative income statements to reflect the adjustments required (1) through (4) above.
You may ignore income taxes.
C. Retained earnings reported for the end of 2020 was $2,416,500 and at the end of 2019 was S2,112,000.
Dividends of $60,000 were
declared in each year. Prepare comparative statements of retained earnings for Lancer Company for 2021
and 2020, reflecting
appropriate adjustments from items (1)-(4) above, ignoring income taxes.

Lancer Company's preliminary income statement for 2021 and its reported income statement for 2020 are given below.
2021
2020
1,350,000
(648,0001
702,000
(172,500)
(162.000
367.500
Sales Revenues
1,320,000
(630.000
690,000
Cost of Goods Sold
Gross Profit
Depreciation
Other Expenses
(172,500)
(153.000
364.500
Net Income
Lancer's records reveal the following information:
(1) Lancer neglected to record S8,000 of supplies expense at the end of 2020, so the supplies inventory was overstated at the end of 2020.
Consequently, the supplies expense computed for 2021 included the additional amount of supplies used in 2020.
(2) On 1/1/19, Lancer purchased a machine for $120,000. Although the machine was expected to have an eight-year life, it was erroneously
expensed in recording the purchase. The appropriate depreciation method for this machine is double-declining-balance with no residual.
(3) At the end of 2021, Lancer decided to change its inventory costing method from the FIFO costing method to the average costing method.
An analysis of the accounting records provides the following cost of goods sold amounts under average cost and FIFO:
Year
FIFO
Average
615,000 645,000
637,500
2019
2020
630,000
648,000 675,000
2021
(4) Lancer acquired a machine on 1/3/19 for $100,000 and estimated its useful life to be 6 years with a salvage value of $10,000. In 2021,
after the preliminary statements were prepared, Lancer realized that the machine could be used for an additional 5 years, but that the
salvage value at the end of that time would probably be only $5,000. Straight-line depreciation is being used.

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