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3 lo 3 a three year fire insurance policy beginning

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3.(L.O. 3) A three-year fire insurance policy beginning on September 1, 2018, waserroneously debited to the Land account when the $720 premium was paid. During 2020 thecompany sold all its land, reducing the Land account to a zero balance. Using the amountrecorded in the Land account, the company suffered a $400 loss on the sale.Instructions:Prepare two correcting entriesa.assuming that the books have not been closed in 2020 andb.assuming that the books have been closed for 2020.a.General JournalJ1DateAccount TitleDebitCreditb.General JournalJ1DateAccount TitleDebitCredit
Student Study Guide forIntermediate Accounting, 17th Edition22 - 184.(L.O. 4) Wolochuck Company is in the process of having its financial statements auditedfor the first time as of 12/31/20. The Company is in its 5th year of operations and has alwaysrelied on its bookkeeper to prepare annual financial statements. The auditor has found thefollowing incorrect or overlooked items that occurred over the past 5 years.a.Wolochuck purchased a machine on June 30, 2017 at a cost of $45,000. The machinehas a salvage value of $3,000 and a useful life of 6 years. The bookkeeper recordedstraight-line depreciation during each year, but failed to consider the salvage value.b. During 2020, Wolochuck changed from the straight-line method of depreciation for itsbuilding to the double-declining balance method. The auditor provided the followingcomputations which present depreciation on both bases:202020192018Straight-line$36,000$36,000$36,000Declining-balance$47,360$59,200$74,000c. The physical inventory count on December 31, 2019, improperly excludedmerchandise costing $20,000 that had been temporarily stored in a public warehouse.Wolochuck uses a periodic inventory system.d. A $18,000 insurance premium paid on October 1, 2019, for a policy that expires onSeptember 30, 2022. The premium was charged to insurance expense when paid.e.Accrued wages of $3,500 were not recorded on December 31, 2018.f.The auditor discovered that a sale of land on February 20, 2018 resulted in a gain of$5,000. The land was purchased in 2012 for $27,000. When the bookkeeper recordedthe sale in 2018 the gain was credited to common stock.g.An advance payment for rent was received on January 1, 2019. The payment was for$36,000 and covers 4 years of rent for a warehouse owned by Wolochuck. When thecash payment was received the bookkeeper recorded the following entry:Cash36,000Rent Payable36,000The Rent Payable account has not been altered since its original recording.Instructions:Prepare the journal entries necessary at 12/31/20 to correct the books for the items found by theauditor. Assume the books have not been closed for 2020. Ignore income tax considerations.
Chapter 22: Accounting Changes and Error Analysis22 - 19General JournalJ1DateAccount TitleDebitCredit
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Balance Sheet, Depreciation, Taxation in the United States, Generally Accepted Accounting Principles

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