Bettner, Inc., is a calendar year corporation whose financial statements for 2012 and 2013 included errors as follows:

Assume that purchases were recorded correctly and that no correcting entries were made at December 31, 2012, or December 31, 2013.

Required:
1. Ignoring income taxes, what amount should Bettner report as a prior period adjustment to the beginning retained earnings in its statement of retained earnings at January 1, 2014?
2. Prepare the journal entries that Bettner would make in 2014 to correct theerrors.

Transcribed Image Text:

Year 2012 2013 Ending Inventory $12,000 overstated Depreciation Expense S22,300 overstated 6,000 understated 8,000 understated