Question 5 Account Titles and Explanation Debit Credit SHOW LIST OF ACCOUNTS LIN
ID: 2485393 • Letter: Q
Question
Question 5
Account Titles and Explanation
Debit
Credit
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Net Income
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Question 5
Dyke Company's net incomes for the past three years are presented below:2016 2015 2014 $481,200 $449,900 $361,100
During the 2016 year-end audit, the following items come to your attention:
1. Dyke bought equipment on January 1, 2013 for $394,400 with a $33,900 estimated salvage value and a 5-year life. The company debited an expense account and credited cash on the purchase date for the entire cost of the asset. (Straight-line method) 2. During 2016, Dyke changed from the straight-line method of depreciating its cement plant to the double-declining balance method. The following computations present depreciation on both bases: 2016 2015 2014 Straight-line 35,800 37,100 38,500 Double-declining 48,100 59,300 74,500 The net income for 2016 was computed using the double-declining balance method, on the January 1, 2016 book value, over the useful life remaining at that time. The depreciation recorded in 2016 was $72,800. 3. Dyke, in reviewing its provision for uncollectibles during 2014, has determined that 0.50% is the appropriate amount of bad debt expense to be charged to operations. The company had used 1/2 of 0.50% as its rate in 2015 and 2016 when the expense had been $19,200 and $14,800, respectively. The company recorded bad debt expense under the new rate for 2016. The company would have recorded $6,800 less of bad debt expense on December 31, 2016 under the old rate. Your answer is partially correct. Try again. Prepare in general journal form the entry necessary to correct the books for the transaction in part 1 of this problem, assuming that the books have not been closed for the current year. (If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Account Titles and Explanation
Debit
Credit
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Your answer is incorrect. Try again. Compute the net income to be reported each year 2014 through 2016.Net Income
2014 $ 2015 $ 2016 $SHOW LIST OF ACCOUNTS
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Your answer is incorrect. Try again. Assume that the beginning retained earnings balance (unadjusted) for 2014 was $1,260,200. At what adjusted amount should this beginning retained earnings balance for 2014 be stated, assuming that comparative financial statements were prepared?Retained earnings $
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Your answer is incorrect. Try again. Assume that the beginning retained earnings balance (unadjusted) for 2016 is $1,802,600 and that non-comparative financial statements are prepared. At what adjusted amount should this beginning retained earnings balance be stated?Retained earnings $ Click if you would like to Show Work for this question:
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Copyright © 2000-2016 by John Wiley & Sons, Inc. or related companies. All rights reserved.Explanation / Answer
1.
Account titles
Debit
Credit
Equipment
$ 394,400.00
Depreciation Expense
($394,400 - $33,900)/5
$ 78,202.00
Accumulated Depreciation
$78,202*4 years
$ 312,808.00
Retained Earnings
$ 159,794.00
2.
2014
($481,200 - $78,202)
$ 402,998.00
2015
($449,900 - $78,202)
$ 371,698.00
2016
($361,100 - $78,202)
$ 282,898.00
3.
Retained earnings (unadjusted)
$ 1,260,200.00
Correction of 2013 error
$394,400 - $78,202
$ 316,198.00
Retained earnings (adjusted)
$ 1,576,398.00
4.
Retained earnings (unadjusted)
$ 1,802,600.00
Correction of 2013 error
$394,400 - ($78,202*3)
$ 159,794.00
Retained earnings (adjusted)
$ 1,962,394.00
Account titles
Debit
Credit
Equipment
$ 394,400.00
Depreciation Expense
($394,400 - $33,900)/5
$ 78,202.00
Accumulated Depreciation
$78,202*4 years
$ 312,808.00
Retained Earnings
$ 159,794.00
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