For each of the items below, need necessary correcting journal entries. The current year is 2014 and
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Question:
1. On January 1, 2013 space was rented to a tenant. On that day, the following amounts were received from the tenant and recorded as rent revenue:
January, 2013 rent $4,000
Refundable damage deposit 5,000
2. On July 1, 2013 rented additional space to a tenant. Two years of rent ($12,000) was received on that day and the entire amount was credited to rent revenue.
3. Office wages were not accrued at year-end. These amounts were recorded when paid in the following year.
2012: $1,900 2013: $2,900
4. Sales salaries were not accrued at year-end. These amounts were recorded when paid in the following year.
2012: $3,100 2013: $1,600 2014: $ 700
5. On February 1, 2012, $4,800 was paid for a 4 year insurance policy. The payment was debited to prepaid insurance. At December 31, 2014 the prepaid ledger account continues to show the $4,800.
6. A second insurance policy, covering a 3 year period, was taken out on July 1, 2012. The $21,600 paid was expensed when paid for.
7. Inventory at December 31, 2012 is understated by $6,000. Inventory at December 31, 2014 is overstated by $14,000.
8. A $20,000 inventory purchase made in December, 2013 was recorded as "purchases" in January, 2014. The goods were correctly included in 2013 ending inventory.
9. A $50,000 machine was expensed on July 1, 2012 when bought. It has a 5 year life and no residual value. The company uses the straight-line method to record amortization on all capital assets.
10. A $4,800 repair expense incurred on October 1, 2013 was incorrectly capitalized on that date. The company recorded amortization using a 4 year life (no residual).
11. Store supplies were expensed when purchased. Store supplies remaining in stock at each year end are as follows:
2012: $1,300 2013: $ 300 2014: $2,700
Related Book For
Intermediate Accounting
ISBN: 978-0470161012
9th Canadian Edition, Volume 2
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield.
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