Below are three independent and unrelated errors. Prepare any journal entries ea

Question

Below are three independent and unrelated errors. Prepare any journal entries each company should record in 2013 to correct the errors. At the end of 20 Times 2, Denver Corporation failed to accrue interest of $8,000 on a note receivable. At the beginning of 20 Times 3, when the company received the cash, it was recorded as interest revenue. On the last day of 20 Times 2, Metro Company received a $90,000 prepayment from a tenant for 20 Times 3 rent of a building. Metro recorded the receipt as rent revenue. During 20 Times 3, WM Corporation discovered that its ending inventories reported on its financial statements were misstated by the following amounts (two separate, unrelated errors). 20 Times 1 Understated by $ 120,000 20 Times 2 Overstated by $ 150,000 WM uses the periodic inventory system and the FIFO cost method.

Explanation / Answer

27 )

1 ) INTREST REVENUE A /C Dr ....... $ 8000

TO ACCRUED INTREST $ 8000

2 ) RENT REVENUE A / C .. Dr .... $ 90000

TO PREPAID RENT $ 90000

3 )

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