PSC 10 - NAME: DATE: PROBLEM SET CHAPTER 10 ACCOUNTING 2303...

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NAME: DATE: PROBLEM SET – CHAPTER 10 ACCOUNTING 2303 1. During 2006 and 2007, Gorman Corporation experienced several transactions involving plant assets. A number of errors were made in recording some of these transactions. For each item listed below, indicate the effect of the error (if any) in the blanks provided by using the following codes: 0 = Overstate; U = Understate; NE = No Effect If no error was made, write NE in each of the four columns. (6 points) 2006 2007 Net Book Net Book Value of Value of Plant 2006 Plant 2007 Assets at Net Assets at Net ERROR: 12/31/06 Income 12/31/07 Income 1. The cost of installing a new computer system in 2006 was not recorded in 2006. It was charged to expense in 2007. 2. In 2007 clerical workers were trained to use the new computer system at a cost of $15,000, which was erroneously capitalized. The cost is to be written off over the expected life of the new computer system. 3. A major overhaul of factory machinery in 2006, which extended its useful life by 5 years, was charged to accumulated depreciation in 2006. 4.
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This note was uploaded on 09/04/2009 for the course ACNT 2303 taught by Professor Haywood during the Spring '09 term at Lone Star College.

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PSC 10 - NAME: DATE: PROBLEM SET CHAPTER 10 ACCOUNTING 2303...

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