At the beginning of 2014, Becky Corporation discovered that depreciation expense

Question

At the beginning of 2014, Becky Corporation discovered that depreciation expense in the years prior to 2014 was incorrectly calculated and recorded. For the years prior to 2014, total depreciation expense of $120,000 was recorded, whereas correct total depreciation expense was $71,100. The tax rate is 37%. Becky follows ASPE and the deferred taxes method of accounting for income taxes.

Prepare Becky’s 2014 journal entry with respect to the depreciation expense that was recorded in the years prior to 2014. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

The accounts for the answer that are correct is : Accumulated deappreciation (debit), and Deferred tax liability and retained earnings (both are creditted)

I just need help getting the correct values/procedure to do it.

Explanation / Answer

Becky Corporation Depreciation recorded                  120,000 Correct Depreciation                     71,000 Additional depreciation Charged                     49,000 Tax rate 37% Post tax Effect of Depreciation to retained earning                     30,870 Deferred Tax Liability@37% of the difference                     18,130 Journal Entry in 2014 for depreciation correction of prior period Account Title Dr $ Cr $ Accumulated Depreciation                     49,000 Retained Earning                  30,870 Deferred Tax Liability                  18,130

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