Bettner, Inc., is a calendar year corporation whose financial statements for 201

Question

Bettner, Inc., is a calendar year corporation whose financial statements for 2015 and 2016 included errors as follows:

Assume that inventory purchases were recorded correctly and that no correcting entries were made at December 31, 2015, or December 31, 2016. The errors were discovered in 2017, after the 2016 financial statements were issued.

Required:

Ignoring income taxes, prepare the journal entry Bettner would make in 2017 to correct the errors.

Year Ending Inventory Depreciation Expense 2015 $ 12,000 overstated $ 22,300 overstated 2016 8,000 understated 6,000 understated

Explanation / Answer

DR CR Cost of good sold 12000 Inventory 12000 Inventory 8000 Cost of good sold 800 Accumulated Depreciation 22300 Depreciation Expense 22300 Depreciation Expense 6000 Accumulated Depreciation 6000

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