Part 1 Dyke Company's net incomes for the past three years are presented below (ignore taxes): 2021 2020 $450,000 $360,000 2022 $480,000 During the 2022 year-end audit, the following items come to your attention: Dyke bought equipment on January 1, 2019 for $490,000 with a $40,000 estimated salvage value and a six-year life. The company debited an expense account and credited cash on the purchase date for the entire cost of the asset. (Straight-line method) Required (a) Prepare in general journal form the entry necessary to correct the books for the transaction above, assuming that the books have not been closed for the current year. (b) Compute the net income to be reported each year 2020 through 2022. Ignore taxes. (c) Assume that the beginning retained earnings balance (unadjusted) for 2020 was $1,260,000. At what adjusted amount should this beginning retained earnings balance for 2020 be stated, assuming that comparative financial statements were prepared? Part 2 Vance Company reported net incomes for a three-year period as follows: 2019, $191,000; 2020, $199,000; 2021, $180,000. In reviewing the accounts in 2022 after the books for the prior year have been closed, you find that the following errors have been made in summarizing activities: 2019 Understatement of accrued advertising expense 6,600 2020 12,000 2021 7,200 Required (a) Determine corrected net incomes for 2019, 2020, and 2021. (b) Give the entry to bring the books of the company up to date in 2022, assuming that the books have been closed for 2021.
Part 1 Dyke Company's net incomes for the past three years are presented below (ignore taxes): 2021 2020 $450,000 $360,000 2022 $480,000 During the 2022 year-end audit, the following items come to your attention: Dyke bought equipment on January 1, 2019 for $490,000 with a $40,000 estimated salvage value and a six-year life. The company debited an expense account and credited cash on the purchase date for the entire cost of the asset. (Straight-line method) Required (a) Prepare in general journal form the entry necessary to correct the books for the transaction above, assuming that the books have not been closed for the current year. (b) Compute the net income to be reported each year 2020 through 2022. Ignore taxes. (c) Assume that the beginning retained earnings balance (unadjusted) for 2020 was $1,260,000. At what adjusted amount should this beginning retained earnings balance for 2020 be stated, assuming that comparative financial statements were prepared? Part 2 Vance Company reported net incomes for a three-year period as follows: 2019, $191,000; 2020, $199,000; 2021, $180,000. In reviewing the accounts in 2022 after the books for the prior year have been closed, you find that the following errors have been made in summarizing activities: 2019 Understatement of accrued advertising expense 6,600 2020 12,000 2021 7,200 Required (a) Determine corrected net incomes for 2019, 2020, and 2021. (b) Give the entry to bring the books of the company up to date in 2022, assuming that the books have been closed for 2021.
College Accounting (Book Only): A Career Approach
13th Edition
ISBN:9781337280570
Author:Scott, Cathy J.
Publisher:Scott, Cathy J.
ChapterA: Methods Of Depreciation
Section: Chapter Questions
Problem 4P: Use the information in Problem A-1 to solve this problem. Assume that the van is five-year property...
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Subject : Accounting
Transcribed Image Text:Part 1
Dyke Company's net incomes for the past three years are presented below (ignore taxes):
2020
$360,000
2022
$480,000
2021
$450,000
During the 2022 year-end audit, the following items come to your attention:
Dyke bought equipment on January 1, 2019 for $490,000 with a $40,000 estimated salvage value and a six-year
life. The company debited an expense account and credited cash on the purchase date for the entire cost of the
asset. (Straight-line method)
Required
(a) Prepare in general journal form the entry necessary to correct the books for the transaction above, assuming
that the books have not been closed for the current year..
Part 2
(b) Compute the net income to be reported each year 2020 through 2022. Ignore taxes.
(c) Assume that the beginning retained earnings balance (unadjusted) for 2020 was $1,260,000. At what
adjusted amount should this beginning retained earnings balance for 2020 be stated, assuming that
comparative financial statements were prepared?
Vance Company reported net incomes for a three-year period as follows:
2019, $191,000; 2020, $199,000;
2021, $180,000.
In reviewing the accounts in 2022 after the books for the prior year have been closed, you find that the
following errors have been made in summarizing activities:
Understatement of accrued advertising expense
2019
6,600
2020
12,000
2021
7,200
Required
(a) Determine corrected net incomes for 2019, 2020, and 2021.
(b) Give the entry to bring the books of the company up to date in 2022, assuming that the books have been
closed for 2021.
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