Tack, Inc., reported a Retained earnings balance of $150,000 at December 31, 2013. In June 2014, Tacks
Question:
a. Merchandise costing $40,000 was mistakenly omitted from the 2013 ending inventory.
b. Equipment purchased on July 1, 2013, for $70,000 was mistakenly charged to a repairs expense account. The equipment should have been capitalized and depreciated using straight-line depreciation, a 10-year useful life, and $10,000 salvage value.
Required:
1. What amount should Tack report as a prior period adjustment to beginning Retained earnings at January 1, 2014? (Ignore taxes.)
2. Prepare the journal entries that Tack would make in June 2014 to correct the errors made in 2013. Assume that depreciation for 2014 is made as a year-end adjusting entry. (Ignore taxes.)
Ending Inventory
The ending inventory is the amount of inventory that a business is required to present on its balance sheet. It can be calculated using the ending inventory formula Ending Inventory Formula =... Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial... Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...
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Related Book For
Financial Reporting and Analysis
ISBN: 978-0078025679
6th edition
Authors: Flawrence Revsine, Daniel Collins, Bruce, Mittelstaedt, Leon
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