The audit adjustment to be recorded to correct the depreciation in 2020
You have been assigned to audit the MACHINERY account of WHITE Printing Corporation for the year ended December 31, 2020. In the course of your examination, you found out that your client acquired on July 1, 2020 three printing machines for a list price of ₱280,000 with a 10% trade discount, term 2/10, n/60. The liability was fully paid on September 1, 2020. In addition, freight charges of ₱1,040 and cost of installation of P5,000 were paid. The client recorded the transactions under machinery account for ₱280,440. Assuming that the annual
DR:
DR: Retained earnings - ₱ 1,120; CR: Depreciation expense - ₱ 1,120
DR: Accumulated depreciation - ₱ 1,372; CR: Retained earnings - ₱ 1,372
DR: Accumulated depreciation - ₱ 1,372; CR: Depreciation expense - ₱ 1,372
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