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information is compiled. 1. Sarasota has failed to accrue sales commissions payable at the end of each of the last 2 years, as follows. December 31, 2019 December 31, 2020 2. December 31, 2018 December 31, 2019 December 31, 2020 $3,400 $2,400 In reviewing the December 31, 2020, inventory, Sarasota discovered errors in its inventory-taking procedures that have caused inventories for the last 3 years to be incorrect, as follows. 3. Understated Understated Overstated $15,100 $20,800 $6,800 Sarasota has already made an entry that established the incorrect December 31, 2020, inventory amount. At December 31, 2020, Sarasota decided to change the depreciation method on its office equipment from double-declining- balance to straight-line. The equipment had an original cost of $104,000 when purchased on January 1, 2018. It has a 10-year useful life and no salvage value. Depreciation expense recorded prior to 2020 under the double-declining-balance method was $38,200. Sarasota has already recorded 2020 depreciation expense of $13,800 using the double-declining-balance method.

information is compiled. 1. Sarasota has failed to accrue sales commissions payable at the end of each of the last 2 years, as follows. December 31, 2019 December 31, 2020 2. December 31, 2018 December 31, 2019 December 31, 2020 $3,400 $2,400 In reviewing the December 31, 2020, inventory, Sarasota discovered errors in its inventory-taking procedures that have caused inventories for the last 3 years to be incorrect, as follows. 3. Understated Understated Overstated $15,100 $20,800 $6,800 Sarasota has already made an entry that established the incorrect December 31, 2020, inventory amount. At December 31, 2020, Sarasota decided to change the depreciation method on its office equipment from double-declining- balance to straight-line. The equipment had an original cost of $104,000 when purchased on January 1, 2018. It has a 10-year useful life and no salvage value. Depreciation expense recorded prior to 2020 under the double-declining-balance method was $38,200. Sarasota has already recorded 2020 depreciation expense of $13,800 using the double-declining-balance method.

FINANCIAL ACCOUNTING
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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No. Account Titles and Explanation 1. 2. 3. 4. Retained Earnings Sales Commission Payable Sales Commission Expense Cost of Goods Sold Retained Earnings Inventory Accumulated Depreciation-Equipment Depreciation Expense Construction in Process Deferred Tax Liability Retained Earnings Debit Credit ECUN
Transcribed Image Text:No. Account Titles and Explanation 1. 2. 3. 4. Retained Earnings Sales Commission Payable Sales Commission Expense Cost of Goods Sold Retained Earnings Inventory Accumulated Depreciation-Equipment Depreciation Expense Construction in Process Deferred Tax Liability Retained Earnings Debit Credit ECUN
Sarasota Company is in the process of adjusting and correcting its books at the end of 2020. In reviewing its records, the following information is compiled. 1. Sarasota has failed to accrue sales commissions payable at the end of each of the last 2 years, as follows. December 31, 2019 December 31, 2020 2. In reviewing the December 31, 2020, inventory, Sarasota discovered errors in its inventory-taking procedures that have caused inventories for the last 3 years to be incorrect, as follows. December 31, 2018 December 31, 2019 December 31, 2020 3. 4. $3,400 $2,400 Sarasota has already made an entry that established the incorrect December 31, 2020, inventory amount. Understated Understated Prior to 2020 Overstated 2020 $15,100 $20,800 $6,800 At December 31, 2020, Sarasota decided to change the depreciation method on its office equipment from double-declining- balance to straight-line. The equipment had an original cost of $104,000 when purchased on January 1, 2018. It has a 10-year useful life and no salvage value. Depreciation expense recorded prior to 2020 under the double-declining-balance method was $38,200. Sarasota has already recorded 2020 depreciation expense of $13,800 using the double-declining-balance method. Before 2020, Sarasota accounted for its income from long-term construction contracts on the completed-contract basis. Early in 2020, Sarasota changed to the percentage-of-completion basis for accounting purposes. It continues to use the completed-contract method for tax purposes. Income for 2020 has been recorded using the percentage-of-completion method. The following information is available. Pretax Income Percentage-of-Completion $144,600 59,100 Completed-Contract $99,300 19,100
Transcribed Image Text:Sarasota Company is in the process of adjusting and correcting its books at the end of 2020. In reviewing its records, the following information is compiled. 1. Sarasota has failed to accrue sales commissions payable at the end of each of the last 2 years, as follows. December 31, 2019 December 31, 2020 2. In reviewing the December 31, 2020, inventory, Sarasota discovered errors in its inventory-taking procedures that have caused inventories for the last 3 years to be incorrect, as follows. December 31, 2018 December 31, 2019 December 31, 2020 3. 4. $3,400 $2,400 Sarasota has already made an entry that established the incorrect December 31, 2020, inventory amount. Understated Understated Prior to 2020 Overstated 2020 $15,100 $20,800 $6,800 At December 31, 2020, Sarasota decided to change the depreciation method on its office equipment from double-declining- balance to straight-line. The equipment had an original cost of $104,000 when purchased on January 1, 2018. It has a 10-year useful life and no salvage value. Depreciation expense recorded prior to 2020 under the double-declining-balance method was $38,200. Sarasota has already recorded 2020 depreciation expense of $13,800 using the double-declining-balance method. Before 2020, Sarasota accounted for its income from long-term construction contracts on the completed-contract basis. Early in 2020, Sarasota changed to the percentage-of-completion basis for accounting purposes. It continues to use the completed-contract method for tax purposes. Income for 2020 has been recorded using the percentage-of-completion method. The following information is available. Pretax Income Percentage-of-Completion $144,600 59,100 Completed-Contract $99,300 19,100
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