Mango Company purchased a delivery truck for $66,000 on January 2, 2021. The useful life was estimated to be 5 years and the salvage value was estimated at $26,000. The truck is depreciated using the straight-line method. When preparing adjusting entries for December 31, 2023, it was discovered that the salvage value had not been deducted when computing depreciation for 2021 and 2022. The correct amount of deprecation was recorded for 2023. What additional journal entry should be made? Answer a. Debit Accumulated Depreciation for $10,400 and credit Retained Earnings for $10,400. b. Debit Accumulated Deprecation for $15,600 and credit Depreciation Expense for $15,600. c. Debit Accumulated Deprecation for $16,000 and credit Retained Earnings for $16,000. d. No additional entry should be made as the error will be accounted for in the current period and prospectively.
Mango Company purchased a delivery truck for $66,000 on January 2, 2021. The useful life was estimated to be 5 years and the salvage value was estimated at $26,000. The truck is
Answer
Debit
Debit Accumulated Deprecation for $15,600 and credit Depreciation Expense for $15,600.
Debit Accumulated Deprecation for $16,000 and credit Retained Earnings for $16,000.
No additional entry should be made as the error will be accounted for in the current period and prospectively.
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