Question: Cherokee Company's auditor discovered some errors. No errors were corrected during 2015. The errors are described as follows: (1.) Beginning inventory on January 1, 2015,

Cherokee Company's auditor discovered some errors. No errors were corrected during 2015. The errors are described as follows:

(1.) Beginning inventory on January 1, 2015, was understated by $5,000.
(2.)

A two-year insurance policy purchased on April 30, 2015, in the amount of $24,000 was debited to Prepaid Insurance. No adjustment was made on December 31, 2015, or on December 31, 2016.

Required:

Prepare appropriate journal entries (assume the 2016 books have not been closed). Ignore income taxes.

(1)

  • Beginning inventory on January 1, 2015, was understated by $5,000.

(2)

  • A two-year insurance policy purchased on April 30, 2015, in the amount of $24,000 was debited to Prepaid Insurance. No adjustment was made on December 31, 2015, or on December 31, 2016.

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