In 2011, internal auditors discovered that PKE Displays, Inc., had debited an expense account for the $350,000 cost of a machine purchased on January 1, 2008. The machine's life was expected to be five years with no residual value. Straight-line depreciation is used by PKE.
1. Prepare the appropriate correcting entry assuming the error was discovered in 2011 before the adjusting and closing entries. (Ignore income taxes.)
2. Assume the error was discovered in 2013 after the 2012 financial statements are issued. Prepare the appropriate correcting entry.