Chen Company is in the process of adjusting and correcting its books at the end of 2015. In reviewing its records, the following information is compiled.

1. Chen has failed to accrue sales commissions payable at the end of each of the last 2 years, as follows.

2. In reviewing the December 31, 2015, inventory, Chen discovered errors in its inventory-taking procedures that have caused inventories for the last 3 years to be incorrect, as follows.

Chen has already made an entry that established the incorrect December 31, 2015, inventory amount.
3. At December 31, 2015, Chen decided to change the depreciation method on its office equipment from double-declining-balance to straight-line. The equipment had an original cost of ¥100,000,000 when purchased on January 1, 2013. It has a 10-year useful life and no residual value. Depreciation expense recorded prior to 2015 under the double-declining-balance method was ¥36,000,000. Chen has already recorded 2015 depreciation expense of ¥12,800,000 using the double-declining-balance method.
4. Before 2015, Chen accounted for its income from long-term construction contracts on the cost-recovery basis. Early in 2015, Chen changed to the percentage-of-completion basis for accounting purposes. It continues to use the cost-recovery method for tax purposes. Income for 2015 has been recorded using the percentage-of-completion method. The information on page 1170 is available.

Instructions Prepare the journal entries necessary at December 31, 2015, to record the above corrections and changes.
The books are still open for 2015. The income tax rate is 40%. Chen has not yet recorded its 2015 income tax expense and payable amounts so current-year tax effects may be ignored. Prior-year tax effects must be considered in item 4.

Transcribed Image Text:

December 31, 2014 December 31, 2015 3,500,000 2,500,000