Top Flight Airways repaired one of its Boeing 767 aircraft at a cost of $300,000, whichTop Flight Airways paid in cash. Top Flight Airways erroneously capitalized this cost as part of the cost of the plane.
1. Journalize both the incorrect entry the accountant made to record this transaction and the correct entry that the accountant should have made.
2. How will this accounting error affect Top Flight Airways’ net income? Ignore depreciation.