In preparation for the October 31, 2016, year-end, Frank was reviewing the records of Berkhout Holdings Ltd.

Question:

In preparation for the October 31, 2016, year-end, Frank was reviewing the records of Berkhout Holdings Ltd. In the Vehicle account, he discovered a balance of $18,000 relating to December 2014 vehicle repairs, which should have been recorded as vehicle maintenance expenses. This error had gone undetected in the 2015 Berkhout Holdings Ltd. pays income taxes at a rate of 27%.
Instructions
1. Journalize the entry to correct the error in 2016.
2. Explain how this correction will be reflected in the statement of changes in equity for the year ended October 31, 2016.
Assuming Berkhout Holdings Ltd. prepares comparative what other impact will this correction have on the for 2016?
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...