A. The company pre-paid $40,000 for a four- year insurance policy on January 1, 2014. At the end of 2017, before the books were closed, it was discovered this full amount had been incorrectly expensed on January 1, 2014. What would be the adjustment to retained earnings on December 31, 2017 to remedy this mistake? Assume a 30% tax rate. B. Would you debit or credit retained earnings for the adjustment calculated in question A

A. The company pre-paid $40,000 for a four- year insurance policy on January 1, 2014. At the end of 2017, before the books were closed, it was discovered this full amount had been incorrectly expensed on January 1, 2014. What would be the adjustment to retained earnings on December 31, 2017 to remedy this mistake? Assume a 30% tax rate. B. Would you debit or credit retained earnings for the adjustment calculated in question A

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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4) Accrued taxes payable of $150,000 were not recorded at December 31, 2020. Office supplies on hand of $95,000 at December 31, 2021 were erroneously treated as expense instead of supplies inventory. Neither of these errors was discovered nor corrected. The effect of these two errors would cause retained earnings at December 31, 2021 to be in error by what amount?
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