Beliveau Company, a small company following ASPE, is adjusting and correcting its books at the end of

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Beliveau Company, a small company following ASPE, is adjusting and correcting its books at the end of 2014.
In reviewing its records, it compiles the following information.
1. Beliveau has failed to accrue sales commissions payable at the end of each of the last two years, as follows:
Dec. 31, 2013 ....................... $3,500
Dec. 31, 2014 ....................... $2,500
2. In reviewing the December 31, 2014 inventory, Beliveau discovered errors in its inventory-taking procedures that have caused inventories for the last three years to be incorrect, as follows:
Dec. 31, 2012 Understated ........................... $16,000
Dec. 31, 2013 Understated ........................... $19,000
Dec. 31, 2014 Overstated ............................ $ 6,700
Beliveau has already made an entry that recognized the incorrect December 31, 2014 inventory amount.
3. In 2014, Beliveau changed the depreciation method on its office equipment from double-declining-balance to straight-line because of a change in the pattern of benefits received. The equipment had an original cost of $100,000 when purchased on January 1, 2012. It has a 10-year useful life and no residual value. Depreciation expense recorded prior to 2014 under the double-declining-balance method was $36,000. Beliveau has already recorded 2014 depreciation expense of $12,800 using the double-declining-balance method.
4. Before 2014, Beliveau accounted for its income from long-term construction contracts on the completed-contract basis because it was unable to reliably measure the degree of completion or the estimated costs to complete. Early in 2014, Beliveau changed to the percentage-of-completion basis for financial accounting purposes. The change was a result of experience with the project and improved ability to estimate the costs to completion and therefore the percentage complete. The completed-contract method will continue to be used for tax purposes. Income for 2014 has been recorded using the percentage-of-completion method. The following information is available:
Pre-Tax Income
Percentage-of-Completion ..........Completed-Contract
Prior to 2014.........................$150,000...........................$105,000
2014......................................60,000..............................20,000
Instructions
Prepare the necessary journal entries at December 31, 2014, to record the above corrections and changes as appropriate.
The books are still open for 2014. As Beliveau has not yet recorded its 2014 income tax expense and payable amounts, tax effects for the current year may be ignored. Beliveau's income tax rate is 25%. Assume that Beliveau applies the taxes payable method of accounting for income taxes.
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Related Book For  book-img-for-question

Intermediate Accounting

ISBN: 978-1118300855

10th Canadian Edition Volume 2

Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Nicola M. Young, Irene M. Wiecek, Bruce J. McConomy

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