Due: 11/19 15 ACC 6355-PPE Workpapers-October 2021 You are engaged in the audit of the financial...

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Due: 11/19 15 ACC 6355-PPE Workpapers-October 2021 You are engaged in the audit of the financial statements of Holman Company for the year ended December 31, 2021. The accompanying analysis of PPE and related accumulated depreciation accounts have been prepared by the chief accountant of the client. You have traced the beginning balances to your prior year's workpapers. Holman Corporation Analysis of Property, Plant & Equipment Year Ended 2021 ASSETS Description Final 12/31/20 Additions Retirements Per ledger 12/31/21 850,000 $ 100,000 950,000 Land %24 15,000 %24 15,000 Land Improvement Buildings 175,000 $ 425,000 600,000 Machinery & Equipment 385,000 $ 150,000 $ 48,000 $ 487,000 1,410,000 $ 690,000 $ 48,000 $ 2,052,000 Accumulated Depreciation Description Final 12/31/20 Additions Retirements Per ledger 12/31/21 Land Improvement 250 250 Buildings 24,500 $ 13,467 37,967 Machinery & Equipment 173,250 $ 36,100 $ 19,200 $ 190,150 197,750 $ 49,817 $ 19,200 $ 228,367 All plant assets are depreciated on the straight-line basis (no residual value taken into consideration) based on the following estimated service lives: Building 25 years and all other items 10 years. The company's policy is to take one half-year's depreciation on all asset additions and disposals during the year. REQUIRED: You are required to review the following journal entries prepared by the client during the year for errors. Prepare the adjusting entries that you would propose at December 31, 2021 to correct any errors to the PPE Schedule. Disregard income tax implications. Computations should be rounded to the nearest dollar. For each client journal entry - determine if the client recorded the transaction correctly and if they did not, (a) Reverse their entry & (b) prepare the correct entry. Prepare a New & Corrected Analysis of Property, Plant & Equipment To calculate the correct ending balances: What's the Best way to analyze an account? When in doubt, do a ??? Revew 9 J正 Il wrom make corechions Paye 4. + Corrected eME Analites %24 %24 %24 %24 の の %24 %24 ACC 6355- PPE Workpapers - October 2021 AUDITOR Holman Corporation Analysis of Property, Plant & Equipment Year Ended 2021 ASSETS Description Final 12/31/20 Additions Retirements Per ledger 12/31/21 Land $ 850,000 Land Improvement Buildings 175,000 Machinery & Equipment $4 385,000 1,410,000 Accumulated Depreciation Description Final 12/31/20 Additions Retirements Per ledger 12/31/21 Land Improvement Buildings 24,500 Machinery & Equipment $4 173,250 197,750 Auditor Recommended Reversing & Correcting Entries Indicate what Client Entry Number you are correcting (1, 2, 3..) Workpapers must include the following: Above schedule completed after and corre Auditor opinion on each Client Journal entry (#1 through #9) If correct - indicate "Auditor agrees with Client entry" If Incorrect – Indicate whatever journal entry(s) you propose to correct ons Reversing entry Correcting entry T-Accounts (completed with all entries from beginning balances to ending balances, reversing entries, correcting entries, etc.) %24 %24 %24 %24 ACC 6355- PPE Workpapers - October 2021 Your audit revealed the following: Your client prepared the following journal entries during the year for the PPE: 1. Depreciation For the Building that was maintained the entire year. 24 7,000 Depreciation Expense, Buildings 7,000 Accumulated Depreciation, Buildings Calculation: $175,000/25 years = $7,000 %3D 2. Additions to Land & Building Description Holman Corporations purchased land as a factory site for $100,000. Holman paid $10,000 to tear down two buildings on the land. Salvage was sold for $5,000. Legal fees of $7,500 were paid for title investigation and making the purchase for the land. Architect's fees were $25,000. Liability insurance during construction cost $7,500. Excavation cost $15,000. The contractor was paid $369,500. Interest costs during construction were $8,000. The Building was completed in June 2021. Land $ 100,000 Cash $ 100,000 Building $ 425,000 Cash $ 425,000 If a correcting entry is needed, Credit Cash for whatever the amount is for the debit 3. Depreciation for the new building Depreciation Expense, Buildings $ 6,467 Accumulated Depreciation, Buildings 6,467 4. Land Improvement Description: On August 18, 2021, $15,000 was paid for paving and fencing a portion of land owned by the company and used as a parking lot for employees. Land Improvement 2$ 15,000 Cash $ 15,000 2. %24 %24 %24 ACC 6355 – PPE Workpapers - October 2021 5. Depreciation for Land Improvement Depreciation Expense, Land Improvement 250 Accumulated Depreciation, Land Improvement $4 250 6. Additions to Machinery Description: On June 1, 2021, Holman Corporation purchased equipment for $140,000. Sales tax on the purchase was $10,000. Other costs incurred were freight charges of $1,200 and installation costs of $1,000. Machinery $ 150,000 Cash $ 150,000 If a correcting entry is needed, Credit Cash for whatever the amount is for the debit 7. Depreciation For Machinery that was maintained the entire year. Depreciation Expense, Machinery 2. 33,700 Accumulated Depreciation, Machinery 33,700 Calculation: ($385,000 - $48,000)/ 10 years = $33,700 8. At December 31, 2021, a piece of equipment that was originally purchased on January 1, 2018 for $48,000 was sold for $25,000 cash. Cash 25,000 $ 19,200 $ 3,800 %$4 Accumulated Depreciation, Machinery Loss on Sale Machinery $ 48,000 9. Depreciation for the new machinery Depreciation Expense, Machinery $ 2,400 Accumulated Depreciation, Machinery 2,400 %24 %24 %24 %24 Due: 11/19 15 ACC 6355-PPE Workpapers-October 2021 You are engaged in the audit of the financial statements of Holman Company for the year ended December 31, 2021. The accompanying analysis of PPE and related accumulated depreciation accounts have been prepared by the chief accountant of the client. You have traced the beginning balances to your prior year's workpapers. Holman Corporation Analysis of Property, Plant & Equipment Year Ended 2021 ASSETS Description Final 12/31/20 Additions Retirements Per ledger 12/31/21 850,000 $ 100,000 950,000 Land %24 15,000 %24 15,000 Land Improvement Buildings 175,000 $ 425,000 600,000 Machinery & Equipment 385,000 $ 150,000 $ 48,000 $ 487,000 1,410,000 $ 690,000 $ 48,000 $ 2,052,000 Accumulated Depreciation Description Final 12/31/20 Additions Retirements Per ledger 12/31/21 Land Improvement 250 250 Buildings 24,500 $ 13,467 37,967 Machinery & Equipment 173,250 $ 36,100 $ 19,200 $ 190,150 197,750 $ 49,817 $ 19,200 $ 228,367 All plant assets are depreciated on the straight-line basis (no residual value taken into consideration) based on the following estimated service lives: Building 25 years and all other items 10 years. The company's policy is to take one half-year's depreciation on all asset additions and disposals during the year. REQUIRED: You are required to review the following journal entries prepared by the client during the year for errors. Prepare the adjusting entries that you would propose at December 31, 2021 to correct any errors to the PPE Schedule. Disregard income tax implications. Computations should be rounded to the nearest dollar. For each client journal entry - determine if the client recorded the transaction correctly and if they did not, (a) Reverse their entry & (b) prepare the correct entry. Prepare a New & Corrected Analysis of Property, Plant & Equipment To calculate the correct ending balances: What's the Best way to analyze an account? When in doubt, do a ??? Revew 9 J正 Il wrom make corechions Paye 4. + Corrected eME Analites %24 %24 %24 %24 の の %24 %24 ACC 6355- PPE Workpapers - October 2021 AUDITOR Holman Corporation Analysis of Property, Plant & Equipment Year Ended 2021 ASSETS Description Final 12/31/20 Additions Retirements Per ledger 12/31/21 Land $ 850,000 Land Improvement Buildings 175,000 Machinery & Equipment $4 385,000 1,410,000 Accumulated Depreciation Description Final 12/31/20 Additions Retirements Per ledger 12/31/21 Land Improvement Buildings 24,500 Machinery & Equipment $4 173,250 197,750 Auditor Recommended Reversing & Correcting Entries Indicate what Client Entry Number you are correcting (1, 2, 3..) Workpapers must include the following: Above schedule completed after and corre Auditor opinion on each Client Journal entry (#1 through #9) If correct - indicate "Auditor agrees with Client entry" If Incorrect – Indicate whatever journal entry(s) you propose to correct ons Reversing entry Correcting entry T-Accounts (completed with all entries from beginning balances to ending balances, reversing entries, correcting entries, etc.) %24 %24 %24 %24 ACC 6355- PPE Workpapers - October 2021 Your audit revealed the following: Your client prepared the following journal entries during the year for the PPE: 1. Depreciation For the Building that was maintained the entire year. 24 7,000 Depreciation Expense, Buildings 7,000 Accumulated Depreciation, Buildings Calculation: $175,000/25 years = $7,000 %3D 2. Additions to Land & Building Description Holman Corporations purchased land as a factory site for $100,000. Holman paid $10,000 to tear down two buildings on the land. Salvage was sold for $5,000. Legal fees of $7,500 were paid for title investigation and making the purchase for the land. Architect's fees were $25,000. Liability insurance during construction cost $7,500. Excavation cost $15,000. The contractor was paid $369,500. Interest costs during construction were $8,000. The Building was completed in June 2021. Land $ 100,000 Cash $ 100,000 Building $ 425,000 Cash $ 425,000 If a correcting entry is needed, Credit Cash for whatever the amount is for the debit 3. Depreciation for the new building Depreciation Expense, Buildings $ 6,467 Accumulated Depreciation, Buildings 6,467 4. Land Improvement Description: On August 18, 2021, $15,000 was paid for paving and fencing a portion of land owned by the company and used as a parking lot for employees. Land Improvement 2$ 15,000 Cash $ 15,000 2. %24 %24 %24 ACC 6355 – PPE Workpapers - October 2021 5. Depreciation for Land Improvement Depreciation Expense, Land Improvement 250 Accumulated Depreciation, Land Improvement $4 250 6. Additions to Machinery Description: On June 1, 2021, Holman Corporation purchased equipment for $140,000. Sales tax on the purchase was $10,000. Other costs incurred were freight charges of $1,200 and installation costs of $1,000. Machinery $ 150,000 Cash $ 150,000 If a correcting entry is needed, Credit Cash for whatever the amount is for the debit 7. Depreciation For Machinery that was maintained the entire year. Depreciation Expense, Machinery 2. 33,700 Accumulated Depreciation, Machinery 33,700 Calculation: ($385,000 - $48,000)/ 10 years = $33,700 8. At December 31, 2021, a piece of equipment that was originally purchased on January 1, 2018 for $48,000 was sold for $25,000 cash. Cash 25,000 $ 19,200 $ 3,800 %$4 Accumulated Depreciation, Machinery Loss on Sale Machinery $ 48,000 9. Depreciation for the new machinery Depreciation Expense, Machinery $ 2,400 Accumulated Depreciation, Machinery 2,400 %24 %24 %24 %24

Answer rating: 100% (QA)

Schedule Completion ASSETS Description Final Additions Retirements Per ledger Land 850000 100000 480... View the full answer