Wilkins Food Products Incorporated acquired a packaging machine from Lawrence Specialists Corporation. Lawrence completed construction of the machine on January 1, 2022. In payment for the machine Wilkins issued a three-year installment note to be paid in three equal payments at the end of each year. The payments include interest at the rate of 10%. Lawrence made a conceptual error in preparing the amortization schedule, which Wilkins failed to discover until 2024. As a result of the error, Wilkins understated interest expense by $57,000 in 2022 and $52,000 in 2023. Required: 1. Indicate in the table below which accounts are incorrect as a result of these errors at January 1, 2024 and whether those accounts are understated or overstated. (Ignore income taxes.) 2. Prepare a journal entry to correct the error. 3. Will Wilkins account for the error (a) retrospectively or (b) prospectively? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Indicate in the table below which accounts are incorrect as a result of these errors at January 1, 2024 and whether those accounts are understated or overstated. (Ignore income xes.) Account 2022 < 2023 Required 1 Required 2 >
Wilkins Food Products Incorporated acquired a packaging machine from Lawrence Specialists Corporation. Lawrence completed construction of the machine on January 1, 2022. In payment for the machine Wilkins issued a three-year installment note to be paid in three equal payments at the end of each year. The payments include interest at the rate of 10%. Lawrence made a conceptual error in preparing the amortization schedule, which Wilkins failed to discover until 2024. As a result of the error, Wilkins understated interest expense by $57,000 in 2022 and $52,000 in 2023. Required: 1. Indicate in the table below which accounts are incorrect as a result of these errors at January 1, 2024 and whether those accounts are understated or overstated. (Ignore income taxes.) 2. Prepare a journal entry to correct the error. 3. Will Wilkins account for the error (a) retrospectively or (b) prospectively? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Indicate in the table below which accounts are incorrect as a result of these errors at January 1, 2024 and whether those accounts are understated or overstated. (Ignore income xes.) Account 2022 < 2023 Required 1 Required 2 >
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Concept explainers
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
Topic Video
Question
![Wilkins Food Products Incorporated acquired a packaging machine from Lawrence Specialists Corporation. Lawrence completed
construction of the machine on January 1, 2022. In payment for the machine Wilkins issued a three-year installment note to be paid in
three equal payments at the end of each year. The payments include interest at the rate of 10%. Lawrence made a conceptual error in
preparing the amortization schedule, which Wilkins failed to discover until 2024. As a result of the error, Wilkins understated interest
expense by $57,000 in 2022 and $52,000 in 2023.
Required:
1. Indicate in the table below which accounts are incorrect as a result of these errors at January 1, 2024 and whether those
accounts are understated or overstated. (Ignore income taxes.)
2. Prepare a journal entry to correct the error.
3. Will Wilkins account for the error (a) retrospectively or (b) prospectively?
Complete this question by entering your answers in the tabs below.
Required 1 Required 2 Required 3
Indicate in the table below which accounts are incorrect as a result of these errors at January 1, 2024 and whether those
accounts are understated or overstated. (Ignore income taxes.)
Account
2022
2023
Required 1
Required 2 >](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fbe32a536-ad89-44f8-ab1c-4801ddac44d1%2Fa40ca9fc-670a-4316-87ee-b46a626c4ddb%2Fiauio0r_processed.png&w=3840&q=75)
Transcribed Image Text:Wilkins Food Products Incorporated acquired a packaging machine from Lawrence Specialists Corporation. Lawrence completed
construction of the machine on January 1, 2022. In payment for the machine Wilkins issued a three-year installment note to be paid in
three equal payments at the end of each year. The payments include interest at the rate of 10%. Lawrence made a conceptual error in
preparing the amortization schedule, which Wilkins failed to discover until 2024. As a result of the error, Wilkins understated interest
expense by $57,000 in 2022 and $52,000 in 2023.
Required:
1. Indicate in the table below which accounts are incorrect as a result of these errors at January 1, 2024 and whether those
accounts are understated or overstated. (Ignore income taxes.)
2. Prepare a journal entry to correct the error.
3. Will Wilkins account for the error (a) retrospectively or (b) prospectively?
Complete this question by entering your answers in the tabs below.
Required 1 Required 2 Required 3
Indicate in the table below which accounts are incorrect as a result of these errors at January 1, 2024 and whether those
accounts are understated or overstated. (Ignore income taxes.)
Account
2022
2023
Required 1
Required 2 >
![For financial reporting, Kumas Poultry Farms has used the declining-balance method of depreciation for conveyor equipment acquired
at the beginning of 2021 for $2,608,000. Its useful life was estimated to be six years with a $172,000 residual value. At the beginning
of 2024, Kumas decides to change to the straight-line method. The effect of this change on depreciation for each year is as follows:
Year
2021
2022
2023
($ in thousands)
Declining
Balance
$ 406
$ 869
406
579
406
387
$ 1,218 $ 1,835
Straight-
Line
Required:
2. Prepare any 2024 journal entry related to the change.
Note: Enter you answers rounded to the nearest dollar. If no entry is required for a transaction/event, select "No journal entry
required" in the first account field.
View transaction list
Journal entry worksheet
1
Difference
$ 463
173
(19)
$617
Record the adjusting entry for depreciation in 2024.
Note: Enter debits before credits.
Event
General Journal
Debit
Credit](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fbe32a536-ad89-44f8-ab1c-4801ddac44d1%2Fa40ca9fc-670a-4316-87ee-b46a626c4ddb%2F4e7t33l_processed.png&w=3840&q=75)
Transcribed Image Text:For financial reporting, Kumas Poultry Farms has used the declining-balance method of depreciation for conveyor equipment acquired
at the beginning of 2021 for $2,608,000. Its useful life was estimated to be six years with a $172,000 residual value. At the beginning
of 2024, Kumas decides to change to the straight-line method. The effect of this change on depreciation for each year is as follows:
Year
2021
2022
2023
($ in thousands)
Declining
Balance
$ 406
$ 869
406
579
406
387
$ 1,218 $ 1,835
Straight-
Line
Required:
2. Prepare any 2024 journal entry related to the change.
Note: Enter you answers rounded to the nearest dollar. If no entry is required for a transaction/event, select "No journal entry
required" in the first account field.
View transaction list
Journal entry worksheet
1
Difference
$ 463
173
(19)
$617
Record the adjusting entry for depreciation in 2024.
Note: Enter debits before credits.
Event
General Journal
Debit
Credit
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