Error Analysis and Correcting Entry the reported net incomes for the first 2 years of Sinclair Products,

Question:

Error Analysis and Correcting Entry the reported net incomes for the first 2 years of Sinclair Products, Inc., were as follows: 2010, $147,000; 2011, $185,000. Early in 2012, the following errors were discovered.

1. Depreciation of equipment for 2010 was overstated $19,000.

2. Depreciation of equipment for 2011 was understated $38,500.

3. December 31, 2010, inventory was understated $50,000.

4. December 31, 2011, inventory was overstated $14,200.

Prepare the correcting entry necessary when these errors are discovered. Assume that the books for 2011 are closed. (Ignore income tax considerations.)

Depreciation
Depreciation is an important concept in accounting. By definition, depreciation is the wear and tear in the value of a noncurrent asset over its useful life. In simple words, depreciation is the cost of operating a noncurrent asset producing...