Braun Corp. purchased a service vehicle liability policy in July, 2021 and paid a five-year premium for $300,000. It was recorded as Insurance Expense. The error was discovered late in 2021 when the accountants were reconciling 2021 for adjusting entries. What is the proper entry to correct the errors in 2021 if the tax rate for all years is 35%? Group of answer choices Prepaid Insurance (End 2021) 270,000 Insurance Expense 270,000 No entry needed because it will self-correct in two more years. Prepaid Insurance (End 2021) 150,000 Income Taxes Payable 60,000 Retained Earnings 90,000 Prepaid Insurance 210,000 Prepaid Income Taxes 73,500 Retained Earnings283,500
Braun Corp. purchased a service vehicle liability policy in July, 2021 and paid a five-year premium for $300,000. It was recorded as Insurance Expense. The error was discovered late in 2021 when the accountants were reconciling 2021 for adjusting entries. What is the proper entry to correct the errors in 2021 if the tax rate for all years is 35%? Group of answer choices Prepaid Insurance (End 2021) 270,000 Insurance Expense 270,000 No entry needed because it will self-correct in two more years. Prepaid Insurance (End 2021) 150,000 Income Taxes Payable 60,000 Retained Earnings 90,000 Prepaid Insurance 210,000 Prepaid Income Taxes 73,500 Retained Earnings283,500
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
Chapter22: Accounting For Changes And Errors.
Section: Chapter Questions
Problem 12RE: Abrat Company failed to accrue an allowance for doubtful accounts of 13,500 in 2019. Upon discovery...
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Braun Corp. purchased a service vehicle liability policy in July, 2021 and paid a five-year premium for $300,000. It was recorded as Insurance Expense. The error was discovered late in 2021 when the accountants were reconciling 2021 for adjusting entries . What is the proper entry to correct the errors in 2021 if the tax rate for all years is 35%?
Group of answer choices
Retained Earnings283,500
| Prepaid Insurance (End 2021) | 270,000 | |
| Insurance Expense | 270,000 |
No entry needed because it will self-correct in two more years.
| Prepaid Insurance (End 2021) | 150,000 | |
| Income Taxes Payable | | 60,000 |
| | 90,000 |
| Prepaid Insurance | 210,000 | |
| Prepaid Income Taxes | 73,500 |
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