Question: Orbit Airways repaired one of its Boeing 767 aircraft at

Orbit Airways repaired one of its Boeing 767 aircraft at a cost of $600,000, which Orbit Airways paid in cash. Orbit Airways erroneously capitalized this cost as part of the cost of the plane.
Journalize both the incorrect entry the accountant made to record this transaction and the correct entry that the accountant should have made. How will this accounting error affect Orbit Airways’ net income? Ignore depreciation.

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  • CreatedJuly 08, 2015
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