Blue Tool Company's December 31 year-end financial statements contained the following errors. December 31, 2025 $8,800 understated 2,200 understated Ending inventory Depreciation expense December 31, 2026 $8,000 overstated An insurance premium of $63,300 was prepaid in 2025 covering the years 2025, 2026, and 2027. The entire amount was charged to expense in 2025. In addition, on December 31, 2026, fully depreciated machinery was sold for $16,100 cash, but the entry was not recorded until 2027. There were no other errors during 2025 or 2026, and no corrections have been made for any of the errors. (Ignore income tax considerations.)

Blue Tool Company's December 31 year-end financial statements contained the following errors. December 31, 2025 $8,800 understated 2,200 understated Ending inventory Depreciation expense December 31, 2026 $8,000 overstated An insurance premium of $63,300 was prepaid in 2025 covering the years 2025, 2026, and 2027. The entire amount was charged to expense in 2025. In addition, on December 31, 2026, fully depreciated machinery was sold for $16,100 cash, but the entry was not recorded until 2027. There were no other errors during 2025 or 2026, and no corrections have been made for any of the errors. (Ignore income tax considerations.)

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter6: Cash And Receivables

Section: Chapter Questions

Problem 6MC: Prior to adjustments, Barrett Companys account balances at December 31, 2019, for Accounts...

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