In 2018, internal auditors discovered that PKE Displays, Inc., had debited an expense account for the $350,000 cost of a machinepurchased on January 1, 2015. The machine's useful life was expected to be five years with no residual value. Straight-line depreciationis used by PKE.Ignoring income taxes, prepare the journal entry PKE will use to correct the error. (If no entry is required for a transaction/event,select "No journal entry required" in the first account field.)NoEvent11EquipmentAccumulated depreciationRetained earningsAnswer is not complete.General JournalDebitCredit350,000

Step 1: In 2018, It is discovered by the internal auditors that PKE Displays, Inc. had debited an…

Answered: In 2018, internal auditors discovered…

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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In 2021, it was discovered that a company had debited expense for the full cost of an asset purchased on January 1, 2018. The cost was $42 million with no expected residual value. Its useful life was 7 years and straight-line depreciation is used by the company. The correcting entry assuming the error was discovered in 2021 before the adjusting and closing entries includes: A debit to Equipment of $42 million A credit to Retained Earnings of $18 million A credit to Equipment of $18 million A debit to Retained Earnings of $24 million
Mawn Company bought and and built a warehouse during 2019. It improperly debited the following related costs to an account titled Land and Buildings: Prepare the correcting entries on December 31, 2019, to properly reclassify the preceding items.
Haney Furniture purchased a delivery truck on January 1, 2014 for $60,000. The financial statement impact of the annual depreciation adjusting entry is illustrated using a slider that assumes different amounts for the annual depreciation. If an answer is zero, enter "0". 1. The book value of the delivery equipment will be _________ over time. 2. The accumulated depreciation of the delivery equipment will be ________ over time. 3. If the annual depreciation is $15,000, the book value of the delivery equipment on December 31, 2014 would be $___________ 4. The depreciation expense for 2014 will be__________ the accumulated depreciation balance on December 31, 2015. 5. If the annual depreciation were $5,000, the accumulated depreciation balance on January 1, 2014 would be $_________ 6. If the annual depreciation were $10,000, the accumulated depreciation balance on December 31, 2014 would be _________-
Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
The Laura Company has the following errors on its books as of December 31, 2020. The books for 2020 have not yet been closed. a. In 2020, fully depreciated equipment (with no residual value) that originally cost $8,000 was sold for $700 as scrap. The company credited the $700 proceeds to Equipment. b. On January 1, 2019, the company recorded the purchase of equipment in exchange for a three-year, noninterest-bearing note payable in the amount of $10,000. Interest rates were then 8%, but no recognition was made of this fact. The present value of $1 at 8% for three periods is 0.7938. (Ignore depreciation.) Required: Prepare journal entries to correct these errors at December 31, 2020. Ignore income taxes.
In 2024, it was discovered that Brandon Irons Metal works had debited expense for the full cost of an asset purchased on January 1, 2021. The cost was $12 million with no expected residual value. Its useful life was 5 years and straight-line depreciation is used by the company. The correcting entry assuming the error was discovered in 2024 before the adjusting and closing entries includes:
Popeye Company purchased a machine for $350,000 on January 1, 2020. Popeye depreciates machines of this type by the straight-line method over a five-year period using no salvage value. Due to an error, no depreciation was taken on this machine in 2020. Popeye discovered the error in 2021. What amount should Popeye record as depreciation expense for 2021? The tax rate is 25%. O O O O $105,000. $52,500. $70,000. $140,000.
In 2025, Sandhill Company discovered an error while preparing its 2025 financial statements. A building constructed at the beginning of 2024 costing $1299900 has not been depreciated. The estimated useful life of the building is 30 years with no salvage value. Straight-line depreciation is used. Sandhill properly included depreciation on its tax return also using straight-line depreciation. Income tax payable was also reported correctly at a tax rate of 20%. Income before depreciation expense in 2025 was $400000. What was the impact on the following accounts at the start of 2025? Accumulated Depreciation was understated by $86660 and Retained Earnings was overstated by $34664. O Accumulated Depreciation was understated by $43330 and Retained Earnings was overstated by $34664. O Accumulated Depreciation was overstated by $43330 and net income was understated by $43330. O Accumulated Depreciation was understated by $43330 and net income was overstated by $43330.
Pastina Company manufactures and sells various types of pasta to grocery chains as private label brands. The company’s fiscal year-end is December 31. The unadjusted trial balance as of December 31, 2011, appears below: The equipment is being depreciated using the straight-line method over an eight-year useful life with $10,000 salvage value. The company estimates that 4% of all year-end accounts receivable probably will not be collected. Employee wages are paid twice a month, on the 22nd wages earned for the 1st through the 15th , and on the 7th of the following month for wages earned from the 16th through the end of month. Wages earned from December 16 through December 31, 2011, were $1,565. On October 1, 2011, Pastina borrowed $50,800 from a local bank and signed a note. The note requires interest to be paid annually on September 30 at 10%. The principal is due in 10 years. On April 1, 2011, the company lent a supplier $28,000 and a note was signed requiring principal and…
On January 2, 2017, Snug Clothing Consignments purchased showroom fixtures for $19,000 cash, expecting the fixtures to remain in service for five years. Snug has depreciated the fixtures on a double-declining-balance basis, with zero residual value. On October 31, 2018, Snug sold the fixtures for $8,200 cash. Record both depreciation expense for 2018 and sale of the fixtures on October 31, 2018. (Record debits first, then credits. Select the explanation on the last line of the journal entry table. Note that 2017 depreciation was recorded and posted in 2017.) Begin by recording the depreciation expense for January 1, 2018 through October 31, 2018. Date Oct. 31 Accounts and Explanation Debit Credit
Tracy Ltd. purchased a piece of equipment on January 1, 2016, for $1,260,000. At that time, it was estimated that the machine would have a 15-year life and no residual value. On December 31, 2020, Tracy’s controller found that the entry for depreciation expense was omitted in error in 2017. In addition, Tracy planned to switch to double-declining-balance depreciation because of a change in the pattern of benefits received, starting with the year 2020. Tracy currently uses the straight-line method for depreciating equipment. Prepare the general journal entries, if any, the accountant should make at December 31, 2020. (Ignore tax effects.) (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round the rate of deprecition under double decling balance method to 5 decimal places, ie. 13.33333%. Round answers to 0 decimal places, e.g. 5,125.)…
XYZ Ltd. is a manufacturing company that produces specialized machinery. The company has been in business for the last 10 years and has always used the straight-line method of depreciation to calculate the depreciation expense for its machinery. However, the company's financial controller has recently proposed that they switch to the double- declining balance method instead. The financial controller argues that this method would result in a more accurate depreciation expense calculation and better reflect the actual usage of the machinery over time. Questions: 1. What is the straight-line method of depreciation? 2. What is the double-declining balance method of depreciation? 3. What are the advantages and disadvantages of using the straight-line method? 4. What are the advantages and disadvantages of using the double-declining balance method? 5. Should XYZ Ltd. switch to the double-declining balance method of depreciation? Why or why not?

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