In 2025, Teal Corporation discovered that equipment purchased on January 1, 2023, for $40,000 was expensed at that time. Theequipment should have been depreciated over 5 years, with no salvage value. The effective tax rate is 30%.Prepare Teal's 2025 journal entry to correct the error. Teal uses straight-line depreciation. (Credit account titles are automaticallyindented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for theamounts. List all debit entries before credit entries.)Account Titles and ExplanationDebitCredit

Step 1: Calculate DepreciationEquipment cost: $40,000Useful life: 5 yearsAnnual depreciation…

Answered: In 2025, Teal Corporation discovered…

SWFT Individual Income Taxes

43rd Edition

ISBN:9780357391365

Author:YOUNG

Publisher:YOUNG

Chapter18: Accounting Periods And Methods

Section: Chapter Questions

Problem 66P

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In 2020, Pina Corporation discovered that equipment purchased on January 1, 2018, for $47,000 was expensed at that time. The equipment should have been depreciated over 5 years, with no salvage value. The effective tax rate is 30%. Pina uses straight-line depreciation. Prepare Pina's 2020 journal entry to correct the error. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Account Titles and Explanation Debit Credit
In 2026, after the 2025 financial statements were issued, internal auditors discovered that PKE Displays, Incorporated, had debited an expense account for the $350,000 cost of a machine purchased on January 1, 2021. The machine’s useful life was expected to be five years with no residual value. Straight-line depreciation is used by PKE. Ignoring income taxes, prepare the journal entry PKE will use to correct the error.
In 2021, internal auditors discovered that PKE Displays, Inc., had debited an expense account for the $350,000 cost of a machine purchased on January 1, 2018. The machine’s useful life was expected to be five years with no residual value. Straight-line depreciation is used by PKE. Ignoring income taxes, what journal entry will PKE use to correct the error?
In 2024, internal auditors discovered that PKE Displays, Incorporated, had debited an expense account for the $350,000 cost of a machine purchased on January 1, 2021. The machine’s useful life was expected to be five years with no residual value. Straight-line depreciation is used by PKE. Ignoring income taxes, prepare the journal entry PKE will use to correct the error (before adjusting and closing entries). Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.
In 2024, internal auditors discovered that PKE Displays, Incorporated, had debited an expense account for the $300,000 cost of a machine purchased on January 1, 2021. The machine’s useful life was expected to be four years with no residual value. Straight-line depreciation is used by PKE. Ignoring income taxes, prepare the journal entry PKE will use to correct the error (before adjusting and closing entries). Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.
In 2025, Ivanhoe Company discovered an error while preparing its financial statements. A building constructed at the beginning of 2024 costing $1350000 has not been depreciated. The estimated useful life of the building is 30 years with no salvage value. Straight- line depreciation is used. Ivanhoe also used straight-line depreciation for tax purposes and properly included depreciation on its tax return. Income tax payable was also reported correctly at a tax rate of 20%. Income before tax and depreciation expenses in 2025 was $450000 What would be the 2025 net income if depreciation had been recorded properly? $324000 O $414000 Ⓒ$405000 $450000 eTextbook and Media
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.
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Quigley Co. bought a machine on January 1, 2022, for $2,800,000. It had a $240,000 estimated residual value and a ten-year life. An expense account was debited on the purchase date. Quigley uses straight-line depreciation. This was discovered in 2024. Prepare the entries related to the machine for 2024. Ignore taxes. (If no entry is required, select "No entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. List all debit entries before credit entries.) Account Titles and Explanation (To correct the error) (To record depreciation expense) Debit Credit
On January 1, 2019, Uptown Builders purchased a machine for $200,000. Uptown's policy is to depreciate this type of machinery using straight-line depreciation, over five years, with no residual value. Because of a bookkeeping error, no depreciation was recognized in Uptown's 2019 or 2020 financial statements. The error was discovered during the preparation of the 2021 financial statements. Ignoring income taxes, the impact of this error on retained earnings prior to any 2021 adjustments is: Question 8 options: Overstatement of $80,000 Understatement of $120,000 Understatement of $80,000 Overstatement of $120,000
Current Attempt in Progress In 2025, Sheffield Corporation discovered that equipment purchased on January 1, 2023, for $45,000 was expensed at that time. The equipment should have been depreciated over 5 years, with no salvage value. The effective tax rate is 30%. Prepare Sheffield's 2025 journal entry to correct the error. Sheffield uses straight-line depreciation. (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 o for the amounts. List all debit entries before crèdit entries.) Account Titles and Explanation Debit Credit 000
In 2020, Bailey Corporation discovered that equipment purchased on January 1, 2018, for $50,000 was expensed at that time. The equipment should have been depreciated over 5 years, with no salvage value. The effective tax rate is 30%. Prepare Bailey's 2020 journal entry to correct the error. Bailey uses straight-line depreciation.

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