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  • Accounting Errors 8-9 (Answers)

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    angela pajel
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    Here are the correcting entries for 2020: Dr. Accrued Expenses 43,000 Dr. Inventories 36,000 Dr. Interest Receivable 8,000 Dr. Unearned Rent 18,000 Dr. Depreciation Expense 80,000 Dr. Prepaid Insurance 7,800 Cr. Cash 192,800 To record accruals, adjustments to inventory, and prepaids not previously recorded.

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    Accounting errors 8-9 (answers)

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    Here are the correcting entries for 2020: Dr. Accrued Expenses 43,000 Dr. Inventories 36,000 Dr. Interest Receivable 8,000 Dr. Unearned Rent 18,000 Dr. Depreciation Expense 80,000 Dr. Prepaid Insurance 7,800 Cr. Cash 192,800 To record accruals, adjustments to inventory, and prepaids not previously recorded.

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    1K views2 pages

    Accounting Errors 8-9 (Answers)

    Uploaded by

    angela pajel
    Here are the correcting entries for 2020: Dr. Accrued Expenses 43,000 Dr. Inventories 36,000 Dr. Interest Receivable 8,000 Dr. Unearned Rent 18,000 Dr. Depreciation Expense 80,000 Dr. Prepaid Insurance 7,800 Cr. Cash 192,800 To record accruals, adjustments to inventory, and prepaids not previously recorded.

    Copyright:

    © All Rights Reserved
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    of 2

    For three consecutive years, the Soy Company failed to recognize accruals, prepayments,

    and other transactions in its records. Reported net income and a listing of the errors
    appear below:
    2018 2019 2020
    Reported profit (loss) 490,000 670,000 (320,000)
    a. Failed to record accrued expenses 34,000 28,000 43,000
    b. Overstated ending inventories 63,000 28,000 36,000
    c. Failed to record accrued interest
    on notes receivable 12,000 6,000 8,000
    d. Failed to recognize unearned rent 24,000 20,000 18,000
    e. Failed to record purchases on account,
    purchases were recorded when paid
    in the subsequent year, merchandise
    properly included in ending inventory
    f. Repairs and maintenance incurred during
    the year capitalized as part of asset
    cost. Full year depreciation at an
    annual rate of 10% is provided in the
    year that the asset is recognized. 120,000 80,000
    g. Failed to recognize prepaid insurance at
    year-end 4,800 6,200 7,800

    Required:
    a. Prepare a schedule to correct the reported profit for each year.
    b. Prepare the necessary correcting entries in 2020, assuming that the books
    for 2020 are still open.
    2018 2019 2020
    Profit (Loss) 490,000 670,000 (320,000)
    a. (34,000) 34,000
    (28,000) 28,000
    (43,000)

    b. (63,000) 63,000
    (28,000) 28,000
    (36,000)
    c. 12,000 (12,000)
    6,000 (6,000)
    8,000
    d. (24,000) 24,000
    (20,000) 20,000
    (18,000)
    e.

    f.

    g. 4,800 (4,800)
    6,200 (6,200)
    7,800

    Corrected Profits/Loss 385,800 710,400 (337,400)

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