Journal entries to correct accounting errors. Give correcting entries for the following situations. In each case, the firm uses the straight-line method of depreciation and closes its books annually on December 31. Recognize all gains and losses currently.
a. A firm purchased a computer for $3,000 on January 1, 2006. It depreciated the computer at a rate of 25% of acquisition cost per year. On June 30, 2008, it sold the computer for $800 and acquired a new computer for $4,000. The bookkeeper made the following entry to record the transaction:

b. A firm purchased a used truck for $7,000. Its cost, when new, was $12,000. The bookkeeper made the following entry to record the purchase:

c. A firm purchased a testing mechanism of April 1, 2006, for $1,200. It depreciated the testing mechanism at a 10% annual rate. A burglar stole the testing mechanism on June 30, 2008. The firm had not insured against this theft. The bookkeeper made the followingentry:

  • CreatedDecember 07, 2011
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