Unearned rental revenue 2057000 3057000 890000

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Unearned Rental Revenue 2,057,000 3,057,000 890,000 2,890,000 2,000,000 Taxes Payable 400,000 800,000 800,000 Common Stock 25,000,000 25,000,000 Ending Retained Earnings 2,880,000 2,280,000 4,674,000 3,474,000 Total Liabilities and Equity $41,337,000 41,700,000 Required: B1a(1). (19 points) Enter in the table above the “write over” entries necessary to correct the 2009 and 2010 errors. B1a(2). (6 points) Enter in the 2011 column in the table above the journal entry necessary to correct the error in the 2011 statements at the beginning of the year. 4
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B1b(1). (4 points) ABC Company’s count and cost for ending inventory for 2010 double counted merchandise with a cost of $30,000. ABC uses the periodic system and debits purchases to Cost of Goods Sold. In the table below write the journal entry to correct ABC’s error in 2010. Debit Credit DR Cost of Goods Sold 30,000 CR Inventory 30,000 B1b(2). (6 points) Assume ABC did not find the error in 2010 but did find thee error at the beginning of 2011. In the table below write the entry to correct ABC’s error at the beginning of 2011. ABC’s tax rate is 40% and incorporate taxes in your answer. Debit Credit DR Retained Earnings 18,000 DR Tax Refund Receivable 12,000 CR Inventory 30,000 B1c(1). (8 points) In 2010 ABC Company sold for Cash a depreciable Machine at a gain of $10,000. The Machine cost when new was $80,000 and accumulated depreciation when sold was $60,000. When the asset was sold, ABC’s only entry was to Debit Accumulated Depreciation in the amount of the gain ($10,000) and to Credit Machine ($10,000). In the table below write ABC’s correcting entry at the end of 2010. Debit Credit DR Accumulated Depreciation 50,000 DR Cash 30,000 CR Machine 70,000 CR Gain On Sale Machine 10,000 B1c(2). (10 points) Assume ABC did not find the error in 2010 but did find thee error at the beginning of 2011. In the table below write the entry to correct ABC’s error at the beginning of 2011. ABC’s tax rate is 40% and incorporate taxes in your answer. Debit Credit DR Accumulated Depreciation 50,000 DR Cash 30,000 CR Machine 70,000 CR Retained Earnings 6,000 CR Taxes Payable 4,000 5
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B1d(1). (4 points) At the beginning of 2010 ABC Company’s Salary Payable account had a Credit balance of $40,000. During 2010 ABC paid $560,000 of salaries Debiting Salary Expense and Crediting Cash. Analysis of salary records at the end of 2010 indicated that Salary Payable should be $55,000. In the table below write ABC’s entry to properly adjust the Salary Payable account at the end of 2010. Debit Credit DR Salary Expense 15,000 CR Salary Payable 15,000 B1e(1). (4 points) On May 1, 2010 ABC Company purchased a two-year insurance policy for $372,000, Debiting Insurance Expense and Crediting Cash $372,000. In the table below write ABC’s entry to properly adjust the Insurance Expense account at the end of 2010. Debit Credit DR Prepaid Insurance ($15,500 per month for 20 months) 310,000 CR Insurance Expense 310,000 B1e(2). (6 points) Assume ABC forgot to adjust the Insurance Expense account at the end of 2010 but did find the error at the beginning of 2011. In the table below write the entry to correct ABC’s error at the beginning of 2011. ABC’s tax rate is 40% and incorporate taxes in your answer.
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