In $2024,$ internal auditors discovered that PKE Displays, Incorporated, had debited an expense account for the $\backslash (\backslash$$ $368,000\backslash )$ cost of equipment purchased on January $1,2021.$ The equipment's life was expected to be five years with no residual value. Straight$-$line depreciation is used by PKE.

Required:

$1.$ Determine the cumulative effect of the error on net income over the three$-$year period from $2021$ through $2023,$ and on retained earnings by the end of $2023.$

$2.$ Prepare the correcting entry, assuming the error was discovered in $2024$ before the adjusting and closing entries. $($Ignore income taxes.$)$

$3.$ Assume instead that the equipment was disposed of in $2025$ and the original error was discovered in $2026$ after the $2025$ financial statements were issued. Prepare the correcting entry in $2026.$

Complete this question by entering your answers in the tabs below.

Determine the cumulative effect of the error on net income over the three$-$year period from $2021$ through $2023,$ and on retained earnings by the end of $2023.$

Net income over the period $2021$ through $2023$ is

Retained earnings by the end of $2023$ is by In $2024,$ internal auditors discovered that PKE Displays, Incorporated, had debited an expense account for the $\backslash (\backslash$$ $368,000\backslash )$ cost of equipment purchased on January $1,2021.$ The equipment's life was expected to be five years with no residual value. Straight$-$line depreciation is used by PKE.

Required:

$1.$ Determine the cumulative effect of the error on net income over the three$-$year period from $2021$ through $2023,$ and on retained earnings by the end of $2023.$

$2.$ Prepare the correcting entry, assuming the error was discovered in $2024$ before the adjusting and closing entries. $($Ignore income taxes.$)$

$3.$ Assume instead that the equipment was disposed of in $2025$ and the original error was discovered in $2026$ after the $2025$ financial statements were issued. Prepare the correcting entry in $2026.$

Complete this question by entering your answers in the tabs below.

Prepare the correcting entry, assuming the error was discovered in $2024$ before the adjusting and closing entries. $($Ignore income taxes.$)$ Note: If no entry is required for a transaction$/$event$,$ select $"$No journal entry required" in the first account field.

Journal entry worksheet

Record the correcting entry for errors discovered.

Note: Enter debits before credits. In $2024,$ internal auditors discovered that PKE Displays, Incorporated, had debited an expense account for the $\backslash$$$368,000$ cost of equipment purchased on January $1,2021.$ The equipment's life was expected to be five years with no residual value. Straight$-$line depreciation is used by PKE.

Required:

$1.$ Determine the cumulative effect of the error on net income over the three$-$year period from $2021$ through $2023,$ and on retained earnings by the end of $2023.$

$2.$ Prepare the correcting entry, assuming the error was discovered in $2024$ before the adjusting and closing entries. $($Ignore income taxes.$)$

$3.$ Assume instead that the equipment was disposed of in $2025$ and the original error was discovered in $2026$ after the $2025$ financial statements were issued. Prepare the correcting entry in $2026.$

Complete this question by entering your answers in the tabs below.

Required $3$

Assume instead that the equipment was disposed of in $2025$ and the original error was discovered in $2026$ after the $2025$ financial statements were issued. Prepare the correcting entry in $2026.$

Note: If no entry is required for a transaction$/$event$,$ select $"$No journal entry required" in the first account field.

Journal entry worksheet

Record the correcting entry for errors discovered.

Note: Enter debits before credits.