On January 1, Year 1, a company places a machine in service at a cost of $175,000 with an estimated useful life of 7 years. The accountant incorrectly expenses this machine in Year 1 bul discovers the error in Year 3 The company uses straight-line depreciation on this assel, and the books are closed for Year 3 Which entry should be recorded on January 1, Year 4, to correct for this material error? O Debit Equipment for $175,000; Debit Depreciation Expense for $25,000; Credit Retained Earnings for $175,000; Credit Accumulated Depreciation for $25,000 O Debit Equipment for $175,000; Credit Retained Earnings for $100,000; Credit Accumulated Depreciation for $75,000 O Debit Equipment for $175,000; Credit Retained Earnings for $150,000; Credit Accumulated Depreciation for $25,000 O Debit Equipment for $175,000; Debit Depreciation Expense for $25,000; Credit Retained Earnings $125,000; Credit Accumulated Depreciation for $75,000

On January 1, Year 1, a company places a machine in service at a cost of $175,000 with an estimated useful life of 7 years. The accountant incorrectly expenses this machine in Year 1 bul discovers the error in Year 3 The company uses straight-line depreciation on this assel, and the books are closed for Year 3 Which entry should be recorded on January 1, Year 4, to correct for this material error? O Debit Equipment for $175,000; Debit Depreciation Expense for $25,000; Credit Retained Earnings for $175,000; Credit Accumulated Depreciation for $25,000 O Debit Equipment for $175,000; Credit Retained Earnings for $100,000; Credit Accumulated Depreciation for $75,000 O Debit Equipment for $175,000; Credit Retained Earnings for $150,000; Credit Accumulated Depreciation for $25,000 O Debit Equipment for $175,000; Debit Depreciation Expense for $25,000; Credit Retained Earnings $125,000; Credit Accumulated Depreciation for $75,000

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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Willow Creek Company purchased and installed carpet in its new general offices on April 30 for a total cost of $ 18,000. The carpet is estimated to have a 15-year useful life and no residual value.Required:Journalize in proper format the entry necessary for recording the purchase of the new carpet.Journalize in proper format the adjusting entry on December 31 for the partial - year depreciation expense for the carpet, assuming that Willow Creek uses the straight-line method.Instructions: Must submit this PQ using an Excel worksheet. Must show all required computations using Excel to support the solution.
Correcting Journal Entries for Errors The following are independent errors: a. In January 2019, repair costs of $11,160 were debited to the Machinery account. At the beginning of 2019, the book value of the machinery was $114,600. No residual value is expected, the remaining estimated life is 10 years, and straight-line depreciation is used. b. All purchases of materials for construction contracts still in progress have been immediately expensed. It is discovered that the use of these materials was $9,750 during 2018 and $12,360 during 2019. c. Depreciation on manufacturing equipment has been excluded from manufacturing costs and treated as a period expense. During 2019, $53,800 of depreciation was accounted for in that manner. Production was 13,200 units during 2019, of which 3,036 remained in inventory at the end of the year. Assume there was no inventory at the beginning of 2019. Required: Prepare journal entries for the preceding errors discovered during 2020.…
Hulme Company operates a small manufacturing facility as a supplement to its regular service activities. At the beginning of the current year, an asset account for the company showed the following balances: Manufacturing equipment Accumulated depreciation through the end of last year During the current year, the following expenditures were incurred for the equipment: Major overhaul of the equipment on January 2 the current year that improved efficiency $ 6,000 Routine repairs on the equipment 1,000 The equipment is being depreciated on a straight-line basis over an estimated life of 17 years with a $11,000 estimated residual value. The annual accounting period ends on December 31. $ 135, 100 57,000 Required: Indicate the effects of the following on the accounting equation. Note: Enter decreases to account categories as negative amounts and do not round your intermediate calculations. 1. The adjustment for depreciation at the end of last year. 2. The two expenditures during the current…
Analysis of Errors: Correcting Entries and Correct Pretax Income Travis Inc. has just completed its financial statements for the reporting year ended December 31 of Year 5. Pretax income is $800,000. The accounts have not been closed for December 31 of Year 5. Further consideration and review of the records revealed the following items related to the Year 5 statements. 1. On January 1 of Year 1, a machine was acquired that cost $50,000. The estimated useful life was 10 years, and the residual value was $10,000. At the time of acquisition, the full cost of the machine was incorrectly debited to the land account. The company uses straight-line depreciation. 2. On January 1 of Year 3, a long-term investment of $90,000 was made by purchasing a $100,000, 8% bond of FDC Corporation. The investment account was debited for $90,000. Each year, starting on December 31 of Year 3, the company has recognized and reported investment revenue on these bonds of $8,000. The bonds mature in 10 years from…
At the beginning of its fiscal year, Koeplin Corporation purchased a machine for $50,000. At the end of the year, the machine had a fair value of $32,000. Koeplin’s controller recorded depreciation of $18,000 for the year, the decline in the machine’s value. Why is this an incorrect approach to measuring periodic depreciation?
A SuperShip sorting machine that cost $6,000 with a useful life of five years and a residual value of $1,000 was purchased on January 1. What is the DDB depreciation for each year? (Enter "0" for any zero balance.) DDB depreciation Year 1 Year 2 Year 3 Year 4 Year 5
Can I please get help with this practice question?7.11 Yoshi Company completed the following transactions and events involving its delivery trucks. Year 1 January 1 Paid $25,015 cash plus $1,635 in sales tax for a new delivery truck estimated to have a five-year life and a $2,450 salvage value. Delivery truck costs are recorded in the Trucks account. December 31 Recorded annual straight-line depreciation on the truck. Year 2 December 31 The truck’s estimated useful life was changed from five to four years, and the estimated salvage value was increased to $2,550. Recorded annual straight-line depreciation on the truck. Year 3 December 31 Recorded annual straight-line depreciation on the truck. December 31 Sold the truck for $5,400 cash. Required: 1-a. Calculate depreciation for Year 2. 1-b. Calculate book value and gain (loss) for sale of Truck on December 31, Year 3. 1-c. Prepare journal entries to record these transactions and events. Required 1A Required 1B…
As part of a major renovation at the beginning of the year, Atiase Pharmaceuticals, Incorporated, sold shelving units (recorded as Equipment) that were 10 years old for $1,070 cash. The shelves originally cost $7,480 and had been depreciated on a straight-line basis over an estimated useful life of 10 years with an estimated residual value of $580. M9-10 (Algo) Part 1 Required: 1. Complete the accounting equation below, indicating the account, amount, and the effect of disposal. Assume that depreciation has been recorded to the date of sale. (Enter any decreases to Assets, Liabilities, or Stockholders' Equity with a minus sign. Do not round intermediate calculations.) Cash Equipment Assets 1,070 (7,250) 420= Accumulated Depreciation-Equipment Liabilities Stockholders' Equ
A company purchased and installed equipment on January 1 at a total cost of $72,000. Straight-line depreciation was calculated based on the assumption of a 5-year life and no salvage value. The equipment was disposed of on July 1 of the fourth year. The company's year-end is December 31. 1. Prepare the general journal entry to update depreciation to July 1 in the fourth year. 2. Prepare the general journal entry to record the disposal of the equipment under each of these three independent situations: a. The equipment was sold for $22,000 cash. (Remember to calculate accumulated depreciation. A full year of depreciation for the first 3 years and then the partial year for the fourth year calculated above). b. The equipment was sold for $15,000 cash. (Remember accumulated depreciation) c. The equipment was totally destroyed in a fire and the insurance company settled the claim for $18,000…
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