The Laura Company has the following errors on its books as of December 31, 2020. The books
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Question:
The Laura Company has the following errors on its books as of December 31, 2020. The books for 2020 have not yet been closed.
a. | In 2020, fully depreciated equipment (with no residual value) that originally cost $8,000 was sold for $700 as scrap. The company credited the $700 proceeds to Equipment. |
b. | On January 1, 2019, the company recorded the purchase of equipment in exchange for a three-year, noninterest-bearing note payable in the amount of $10,000. Interest rates were then 8%, but no recognition was made of this fact. The present value of $1 at 8% for three periods is 0.7938. (Ignore depreciation.) |
Required:
Prepare journal entries to correct these errors on December 31, 2020. Ignore income taxes. |
Related Book For
Intermediate Accounting Reporting and Analysis
ISBN: 978-1337788281
3rd edition
Authors: James M. Wahlen, Jefferson P. Jones, Donald Pagach
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