Lindy Company\'s auditor discovered two errors. No errors were corrected during

Question

Lindy Company's auditor discovered two errors. No errors were corrected during 2015. The errors are described as follows: (1.) Merchandise costing $4,000 was sold to a customer for $9,000 on December 31, 2015, but it was recorded as a sale on January 2, 2016. The merchandise was properly excluded from the 2015 ending inventory. Assume the periodic inventory system is used. (2.) A machine with a five-year life was purchased on January 1, 2015. The machine cost $20,000 and has no expected salvage value. No depreciation was taken in 2015 or 2016. Assume the straight-line method for depreciation.

Required:

Prepare appropriate journal entries (assume the 2016 books have not been closed). Ignore income taxes.

Explanation / Answer

Solution:

1. Sales a/c ........Dr. 9000

Retained earnings a/c....Cr. 9000

2. Depreciation expense a/c ....Dr. 4000

Retained earnings a/c......Dr 4000

Accumulated depreciation a/c.....Cr. 8000

Related Questions

Navigate

• Browse (All)
• Browse L
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.