On January 1, 2020 the accountant of Mikhailovich Ltd. recorded a purchase of new equipment for $40,000 as a debited to the repair expense account. The company depreciates equipment on a straight-line basis over a 10-year life with no salvage value. The error was discovered in July, 2021. The correcting entry the accountant must make in 2021 would include which of the following? Ignore income taxes. Please explain answer.

a) Credit to retained earnings of $36,000

b) Debit to retained earnings of $40,000

c) Credit to retained earnings of $32,000

d) Debit to retained earnings for $36,000

e) Debit to retained earnings of $4,000

Part B:

Vladimirovich Inc., a public company, is selling a conveyer belt which they have replaced in their factory. The sale meets the conditions for held-for-sale classification. The original cost of the equipment is $420,000 and that accumulated depreciation to date of disuse is $201,000. The broker selling the equipment indicates that the conveyer belt will sell for $201,000 but they will charge a 10% commission on the sale. The value in the Equipment held-for-sale asset account after all appropriate entries have been made is: (Explain answer)

a) $180,900

b) $420,000

c) $201,000

d) $219,000

e) $221,100

Part C:

Which of the following statements regarding revenue recognition is/are true?

i. A seller does not necessarily have to receive cash at the time of a sale for revenue to be recorded.

ii. The earnings based and contract-based approaches to recognizing revenue will always result in the same amount of revenue recognized

a) Neither of the statements are true

b) Both of the statements are true

c) Only ii are true

d) Only i is true

Answer rating: 100% (QA)

Part A c Credit to retained earnings of 32000 The entry the accountant must make in 2021 would inclu... View the full answer