The accountant has made the following calculations and journal entries to record the following transactions. There...

   

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The accountant has made the following calculations and journal entries to record the following transactions. There are numerous errors. You will need to find the calculation and/or journal entries that are incorrect, write the correct answer, showing your work and/or correct journal entry and explain how the accountant's errors would affect the financial statements. For example, if the story stated that revenue was $57,500, but the accountant recorded the revenue as $75,500, you will need to write the correct journal entry, then explain that the error would overstate the revenue on the Income Statement and cause Net Income to be too high. The wrong Net Income would be included on the Statement od Stockholders' Equity resulting in Retained Earnings being too high. Retained earnings is included on the Balance Sheet and therefore, overstate Equity and assets. Journal paper and a space to write the effects of the accountant's errors has been provided below. Journal paper does NOT indicate that the journal entry is correct or incorrect or how many accounts are involved. The accountant for SpaceX received the following information and made the journal entry. On Sept. 1, 2020, SpaceX purchased land, a building, and equipment for one price of $2,860,000. The estimated fair values of the land, building, and equipment are $778,800, $1,486,800, and $1,274,400, respectively. SpaceX issued a $2,860,000, 5%, six-year note to make this purchase. The monthly payment is $51,639, which includes principal and interest payments. The building is depreciated using straight-line and has a salvage value of $4,800. The equipment is depreciated using double-decline and has a salvage value of $9,600. Both have a useful life of 10 years. 1. Date Account 9/1 Land Building Equipment Gain on Purchase Cash Date Account Debit Debit 778,800 1,486,800 1,274,400 Credit Credit 680,000 2,860,000 2. Date Account 9/1 Cash Loan Payable 9/30 Loan Payable Cash Date Account Date Account 9/30 Depreciation Expense-Building Debit 2,860,000 3. Depreciation Building ($1,486,800-4,800/120 months = $12,350 Equipment ($1,274,400-9,600/120 = $10,540 x 2 = $21,080 Land = ($ 778,800-0/120 = 6,490 Accumulated Depreciation-Building Depreciation Expense-Land Accumulated Depreciation-Land Depreciation Expense-Equipment Accumulated Depreciation-Equipment Date Account 51,639 Debit Debit 12,350 6,490 21,080 Debit Credit 2,860,000 51,639 Credit Credit 12,350 6,490 21,080 Credit 4. Also on Sept. 1, 2020, SpaceX sold an old piece of machinery for $6,795. The original price of the machinery was $30,000, accumulated depreciation is up-to-date and totals $22,500. Date Account 9/1 Cash Accumulated Depreciation Gain Machinery Date Account Date Account 9/1 Cash Bond Payable 9/30 Interest Expense Cash *2,155,892 x .05 x ½ = 53,897.30 Debit Date Account 30,000 22,500 Debit 5. Finally, SpaceX issued a $2,000,000 of 6% bonds, due in ten years, with interest payable semi- annually on Sept. 30 and March 31 each year. The market interest rate is 5% the bonds will issue at $2,155,892. Debit 2,155,892 53,897.30 Credit Debit 6,795 30,000 Credit Credit 2,155,892 53,897.30 Credit The accountant has made the following calculations and journal entries to record the following transactions. There are numerous errors. You will need to find the calculation and/or journal entries that are incorrect, write the correct answer, showing your work and/or correct journal entry and explain how the accountant's errors would affect the financial statements. For example, if the story stated that revenue was $57,500, but the accountant recorded the revenue as $75,500, you will need to write the correct journal entry, then explain that the error would overstate the revenue on the Income Statement and cause Net Income to be too high. The wrong Net Income would be included on the Statement od Stockholders' Equity resulting in Retained Earnings being too high. Retained earnings is included on the Balance Sheet and therefore, overstate Equity and assets. Journal paper and a space to write the effects of the accountant's errors has been provided below. Journal paper does NOT indicate that the journal entry is correct or incorrect or how many accounts are involved. The accountant for SpaceX received the following information and made the journal entry. On Sept. 1, 2020, SpaceX purchased land, a building, and equipment for one price of $2,860,000. The estimated fair values of the land, building, and equipment are $778,800, $1,486,800, and $1,274,400, respectively. SpaceX issued a $2,860,000, 5%, six-year note to make this purchase. The monthly payment is $51,639, which includes principal and interest payments. The building is depreciated using straight-line and has a salvage value of $4,800. The equipment is depreciated using double-decline and has a salvage value of $9,600. Both have a useful life of 10 years. 1. Date Account 9/1 Land Building Equipment Gain on Purchase Cash Date Account Debit Debit 778,800 1,486,800 1,274,400 Credit Credit 680,000 2,860,000 2. Date Account 9/1 Cash Loan Payable 9/30 Loan Payable Cash Date Account Date Account 9/30 Depreciation Expense-Building Debit 2,860,000 3. Depreciation Building ($1,486,800-4,800/120 months = $12,350 Equipment ($1,274,400-9,600/120 = $10,540 x 2 = $21,080 Land = ($ 778,800-0/120 = 6,490 Accumulated Depreciation-Building Depreciation Expense-Land Accumulated Depreciation-Land Depreciation Expense-Equipment Accumulated Depreciation-Equipment Date Account 51,639 Debit Debit 12,350 6,490 21,080 Debit Credit 2,860,000 51,639 Credit Credit 12,350 6,490 21,080 Credit 4. Also on Sept. 1, 2020, SpaceX sold an old piece of machinery for $6,795. The original price of the machinery was $30,000, accumulated depreciation is up-to-date and totals $22,500. Date Account 9/1 Cash Accumulated Depreciation Gain Machinery Date Account Date Account 9/1 Cash Bond Payable 9/30 Interest Expense Cash *2,155,892 x .05 x ½ = 53,897.30 Debit Date Account 30,000 22,500 Debit 5. Finally, SpaceX issued a $2,000,000 of 6% bonds, due in ten years, with interest payable semi- annually on Sept. 30 and March 31 each year. The market interest rate is 5% the bonds will issue at $2,155,892. Debit 2,155,892 53,897.30 Credit Debit 6,795 30,000 Credit Credit 2,155,892 53,897.30 Credit