The audit adjustment to be recorded to correct the depreciation in 2020

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question

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 depreciation rate is 10% and that the client has already recorded the 2020 depreciation without correcting the asset account. The audit adjustment to be recorded to correct the depreciation in 2020, assuming that the books are already closed will be:

DR: Accumulated depreciation - ₱ 1,120; CR: Depreciation expense - ₱ 1,120

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

Expert Solution
steps

Step by step

Solved in 2 steps with 1 images

Blurred answer
Knowledge Booster
Revenue Recognition
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education