Williams-Santana Inc. is a manufacturer of high-tech Industrial parts that was started in 2009 by two talented engineers with littlebusiness training. In 2021, the company was acquired by one of its major customers. As part of an Internal audit, the following factswere discovered. The audit occurred during 2021 before any adjusting entries or closing entries were prepared.a. A five-year casualty Insurance policy was purchased at the beginning of 2019 for $33,000. The full amount was debited toInsurance expense at the time.b. Effective January 1, 2021, the company changed the salvage value used in calculating depreciation for its office building. Thebuilding cost $604,000 on December 29, 2010, and has been depreciated on a straight-line basis assuming a useful life of 40 yearsand a salvage value of $120,000. Declining real estate values in the area indicate that the salvage value will be no more than$30,000.c. On December 31, 2020, merchandise Inventory was overstated by $23,000 due to a mistake in the physical Inventory count usingthe periodic Inventory system.d. The company changed Inventory cost methods to FIFO from LIFO at the end of 2021 for both financial statement and income taxpurposes. The change will cause a $940,000 Increase in the beginning inventory at January 1, 2022.e. At the end of 2020, the company falled to accrue $15,100 of sales commissions earned by employees during 2020. The expensewas recorded when the commissions were paid in early 2021.f. At the beginning of 2019, the company purchased a machine at a cost of $680,000. Its useful life was estimated to be 10 years withno salvage value. The machine has been depreciated by the double-declining balance method. Its book value on December 31,2020, was $435,200. On January 1, 2021, the company changed to the straight-line method.g. Warranty expense is determined each year as 1% of sales. Actual payment experience of recent years indicates that 0.70% is abetter indication of the actual cost. Management effects the change in 2021. Credit sales for 2021 are $3,600,000; In 2020 theywere $3,300,000.Required:For each situation:1. Identify whether it represents an accounting change or an error. If an accounting change, Identify the type of change. Foraccounting errors, choose "Not applicable".2. Prepare any Journal entry necessary as a direct result of the change or error correction, as well as any adjusting entry for 2021related to the situation described. (Ignore tax effects.)Complete this question by entering your answers in the tabs below.Required 1Required 2Prepare any journal entry necessary as a direct result of the change or error correction, as well as any adjusting entry for 2021 relatedto the situation described. (Ignore tax effects.) (If no entry is required for a transaction/event, select "No journal entry required" in thefirst account field.)View transaction listJournal entry worksheet<3 4125 6 7814Record entry necessary as a direct result of the change or error correction.

A journal is a detailed account that records all the financial transactions of a business, to be…

Williams-Santana Inc. is a manufacturer of high-tech Industrial parts that was started in 2009 by two talented engineers with little business training. In 2021, the company was acquired by one of its major customers. As part of an Internal audit, the following facts were discovered. The audit occurred during 2021 before any adjusting entries or closing entries were prepared. a. A five-year casualty Insurance policy was purchased at the beginning of 2019 for $33,000. The full amount was debited to Insurance expense at the time.

Williams-Santana Inc. is a manufacturer of high-tech Industrial parts that was started in 2009 by two talented engineers with little business training. In 2021, the company was acquired by one of its major customers. As part of an Internal audit, the following facts were discovered. The audit occurred during 2021 before any adjusting entries or closing entries were prepared. a. A five-year casualty Insurance policy was purchased at the beginning of 2019 for $33,000. The full amount was debited to Insurance expense at the time.

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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Williams-Santana, Inc., is a manufacturer of high-tech industrial parts that was started in 2006 by two talented engineers with little business training. In 2018, the company was acquired by one of its major customers. As part of an internal audit, the following facts were discovered. The audit occurred during 2018 before any adjusting entries or closing entries were prepared. The income tax rate is 40% for all years. a. A five-year casualty insurance policy was purchased at the beginning of 2016 for $36,500. The full amount was debited to insurance expense at the time. b. Effective January 1, 2018, the company changed the salvage values used in calculating depreciation for its office building. The building cost $612,000 on December 29, 2007, and has been depreciated on a straight-line basis assuming a useful life of 40 years and a salvage value of $100,000. Declining real estate values in the area indicate that the salvage value will be no more than $25,000 c. On December 31, 2017,…
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