Assume that, when the delivery truck was sold on January 1, the accountant only recorded a debit to Cash and a credit to Gain on Disposal. Because of this, also assume that the accountant recorded depreciation on this asset for 2024. What accounts are now overstated or understated because of these errors? Gain on Disposal Accumulated Depreciation-Vehicles Vehicles Depreciation Expense Loss on Disposal 00000

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question

Gan

Assume that, when the delivery truck was sold on January 1, the accountant only recorded a debit to Cash and a credit to Gain on
Disposal. Because of this, also assume that the accountant recorded depreciation on this asset for 2024. What accounts are now
overstated or understated because of these errors?
Gain on Disposal
Accumulated Depreciation-Vehicles
Vehicles
Depreciation Expense
Loss on Disposal
00000
Transcribed Image Text:Assume that, when the delivery truck was sold on January 1, the accountant only recorded a debit to Cash and a credit to Gain on Disposal. Because of this, also assume that the accountant recorded depreciation on this asset for 2024. What accounts are now overstated or understated because of these errors? Gain on Disposal Accumulated Depreciation-Vehicles Vehicles Depreciation Expense Loss on Disposal 00000
Presented here are selected transactions for Cullumber Limited for 2024, Cullumber uses straight-line depreciation and records
adjusting entries annually.
Jan.
1 Sold a delivery truck for $19,190 cash. The truck cost $67,530 when it was purchased on January 1, 2021, and was
depreciated based on a four-year useful life with a $6,290 residual value.
Sept. 1
Dec. 30
Sold computers that were purchased on January 1, 2022. They cost $11,628 and had a useful life of three years
with no residual value. The computers were sold for $540 cash.
Retired equipment that was purchased on January 1, 2015. The equipment cost $146,400 and had a useful life of
10 years with no residual value. No proceeds were received.
Transcribed Image Text:Presented here are selected transactions for Cullumber Limited for 2024, Cullumber uses straight-line depreciation and records adjusting entries annually. Jan. 1 Sold a delivery truck for $19,190 cash. The truck cost $67,530 when it was purchased on January 1, 2021, and was depreciated based on a four-year useful life with a $6,290 residual value. Sept. 1 Dec. 30 Sold computers that were purchased on January 1, 2022. They cost $11,628 and had a useful life of three years with no residual value. The computers were sold for $540 cash. Retired equipment that was purchased on January 1, 2015. The equipment cost $146,400 and had a useful life of 10 years with no residual value. No proceeds were received.
Expert Solution
steps

Step by step

Solved in 3 steps with 1 images

Blurred answer
Knowledge Booster
Accounting Changes and Error Analysis
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education