On December 31, 2008, Lakeside Co. shows the following account for machinery it had assembled for its

Question:

On December 31, 2008, Lakeside Co. shows the following account for machinery it had assembled for its own use during 2008:

An analysis of the details in the account disclosed the following:
(a) The old machine, which was removed before the installation of the new one, had been fully depreciated.
(b) Cash discounts received on the payments for materials used in construction totaled $3,000, and these were reported in the purchase discounts account.
(c) The factory overhead account shows a balance of $292,000 for the year ended December 31, 2008; this balance exceeds normal overhead on regular plant activities by approximately $16,900 and is attributable to machine construction.
(d) A profit was recognized on construction for the difference between costs incurred and the price at which the machine could have been purchased.

Instructions:
1. Determine the machinery and machine tools balances as of December 31, 2008.
2. Give individual journal entries necessary to correct the accounts as of December 31, 2008, assuming that the nominal accounts are stillopen.