Nadeau Company, a small company following ASPE, is adjusting and correcting its books at the end of 2020. In reviewing its records, it compiles the following information. 

1. Nadeau has failed to accrue sales commissions payable at the end of each of the last two years, as follows (the correct amounts were paid): 

Dec. 31, 2019.........$6,200 

Dec. 31, 2020.........$3,800 

2. In reviewing the December 31, 2020 inventory, Nadeau discovered errors in its inventory-taking procedures that have caused inventories for the past three years to be incorrect, as follows: 

Dec. 31, 2018.......Understated $21,000 

Dec. 31, 2019.......Understated $24,000 

Dec. 31, 2020........Overstated $9,000 

Nadeau has already made an entry that recognized the incorrect December 31, 2020 inventory amount. 

3. In 2020, Nadeau changed the depreciation method on its office equipment from double-declining-balance to straight-line because of a change in the pattern of benefits received. The equipment had an original cost of $160,000 when purchased on January 1, 2018. At that time, it was estimated that the office equipment had an eight-year useful life and no residual value. Depreciation expense recorded prior to 2020 under the double-declining-balance method was $70,000. Nadeau has already recorded 2020 depreciation expense of $22,500 using the double-declining-balance method. 4. Before 2020, Nadeau accounted for its income from long-term construction contracts on the completedcontract basis because it was unable to reliably measure the degree of completion or the estimated costs to complete. Early in 2020, Nadeau changed to the percentage-of-completion basis for financial accounting purposes. The change was a result of experience with the projects and improved ability to estimate the costs to completion and therefore the percentage complete. The completed-contract method will continue to be used for tax purposes. Income for 2020 has been recorded using the percentage-of-completion method. The following information is available: Nadeau has already made an entry that recognized the incorrect December 31, 2020 inventory amount. 3. In 2020, Nadeau changed the depreciation method on its office equipment from double-declining-balance to straight-line because of a change in the pattern of benefits received. The equipment had an original cost of $160,000 when purchased on January 1, 2018. At that time, it was estimated that the office equipment had an eight-year useful life and no residual value. Depreciation expense recorded prior to 2020 under the double-declining-balance method was $70,000. Nadeau has already recorded 2020 depreciation expense of $22,500 using the double-declining-balance method. 

4. Before 2020, Nadeau accounted for its income from long-term construction contracts on the completedcontract basis because it was unable to reliably measure the degree of completion or the estimated costs to complete. Early in 2020, Nadeau changed to the percentage-of-completion basis for financial accounting purposes. The change was a result of experience with the projects and improved ability to estimate the costs to completion and therefore the percentage complete. The completed-contract method will continue to be used for tax purposes. Income for 2020 has been recorded using the percentage-of-completion method. The following information is available: 

Instructions 

Prepare the necessary journal entries at December 31, 2020, to record the above corrections and changes as appropriate. The books are still open for 2020. Because Nadeau has not yet recorded its 2020 income tax expense and payable amounts, you may ignore tax effects for the current year. Nadeau's income tax rate is 25%. Assume that Nadeau applies the taxes payable method of accounting for income taxes

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Pre-Tax Income Percentage-of-Completion Completed-Contract Prior to 2020 $195,000 $145,000 2020 75,000 30,000