KEW Enterprises launched in January 20X1 to produce a hand sanitizer that promises to be more effective and gentler on the skin than existing products. Family members, one of whom was appointed as office manager and accountant, were permanent members of the company. Despite his conscientiousness, the office manager lacked formal accounting training and this became evident when the growing company was forced to hire a CPA as controller in March 20X4. While ostensibly brought in to relieve the office manager's stress, management made it clear to the new controller that they had some concerns about the quality of the information they received. Accordingly, the controller made it a priority to review the records of previous years to look for ways to improve the accounting system. From this review, the following errors were uncovered.

1. The office manager fixed the rent for equipment and facilities when paid. The amounts paid in 20X1, 20X2 and 20X3, representing the rent for the following year, were $5,000, $4,500 and $4,900, respectively.
2. No adjustment entries were made to reflect accrued salaries. The amounts required to be presented as accrued fees at 31 December, 20X1, 20X2 and 20X3 were $12,000, $13,500 and $8,300, respectively.
3. Errors occurred in the depreciation calculations that caused depreciation expense to be shown as $3,500 over in 20X1, under $7,000 in 20X2, and under $6,000 in 20X3.
4. In February 20X3, some surplus production equipment was sold for $4,000, which originally cost $14,000; $12,000 has been correctly depreciated for this equipment. The office manager made the following entry to record the sale:

To record the sale of surplus equipment

in advance	$	4.000
accumulated depreciation		10.000
Equipment				$	14.000

Necessary:

prepare the revision entry. Ignore income taxes. (For example, the first required entry has been made in the worksheet.) (Negative amounts should be indicated with a minus sign. Select "Comparison error" if there is an error, "No correction needed" if there is no error. " in the Dr. Account column. )

Answer rating: 100% (QA)

Based on the information provided the following errors were identified 1 Error in recording rent exp... View the full answer