A531-11UFS

A531-11UFS - Requirement (a) For each of the accounting...

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Unformatted text preview: Requirement (a) For each of the accounting changes or errors the adjusting journal entries to be made would be as follows: Full Name: Umme Fatema Siddique Student Number: 805 936 291 Journal Entries Debit Credit Course Code/Number: ACCT 531 1 Estimated Litigation Loss $25,000 Assignment Number: 11 Estimated Litigation Liability $25,000 2 Bad Debt Expense $15,000 Allowance for Doubtful Accounts $15,000 [($22,500/1.5%) x 1%] = $15,000 3 Land $40,000 Accumulated Amort.- Equipment* $32,000 Amortization Expense $8,000 Retained Earnings $24,000 Equipment $40,000 *[$40,000/5 = $8,000 yearly]; [$8,000 x 4 years]=32,000 4 (Only revised yearly Amortization adjustment for the year) Accumulated Amortization- Building $22,150 Amortization Expense- Building $22,150 [$54,150 - 32,000] = $22,150 5 Accumulated Amortization- Equipment $5,600 Amortization Expense- Equipment* $5,600 *[($54,000 4,000) 5] = $10,000 yearly; [$54,000 (10,000 x 3) 2,000)/ 5] = $4,400 [$10,000 4,400] = $5,600 6 No entry is required for this case. Bacause there is no amounts or entries missing due to the error in classification. Requirement (b) The same entries above are repeated below assuming an income tax rate of 25% where needed throughout the fiscal periods that are identified: Journal Entries Debit Credit 1 Estimated Litigation Loss $25,000 Estimated Litigation Liability $25,000 2 Bad Debt Expense* $15,000 Allowance for Doubtful Accounts $15,000 *[($22,500/1.5%) x 1%] = $15,000 3 Land $40,000 Accumulated Amortization- Equipment* $32,000 Future Income Tax Liability** $6,000 Amortization Expense $8,000 Retained Earnings*** $18,000 Equipment $40,000 *[$40,000/5 = $8,000 yearly]; [$8,000 x 4 years]=32,000 **[$24,000 x 25%] = $6,000 ***[$24,000 x (1- 25%)] = $18,000 4 Accumulated Amortization- Building $22,150 Amortization Expense- Building $22,150 [$54,150 - 32,000] = $22,150 5 Accumulated Amortization- Equipment...
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This note was uploaded on 01/01/2012 for the course ACCT 531 taught by Professor Janicecharko during the Winter '11 term at Humber.

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A531-11UFS - Requirement (a) For each of the accounting...

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