1) ABC Co. purchased machinery that cost $200,000 on January 1, 2018. The entire cost was recorded as an expense. The machinery has a nine-year life and a $10,000 residual value. The error was discovered on December 20, 2021. Ignore income tax considerations.

ABCs income statement for the year ended December 31, 2021, should show depreciation expense of _______

3) Equipment was purchased at the beginning of 2018 for $900,000. At the time of its purchase, the equipment was estimated to have a useful life of five years and a salvage value of $100,000. The equipment was depreciated using the straight-line method of depreciation through 2021. At the beginning of 2022, the estimate of useful life was revised to a total life of eight years and the expected salvage value was changed to $30,000. The amount to be recorded for depreciation for 2022 is _______

7) XYZ Co. began operations on January 1, 2020. Financial statements for 2020 and 2021 contained the following errors:

Dec. 31, 2020 Dec. 31, 2021

Ending inventory $198,000 overstated $219,000 understated

Depreciation expense 126,000 overstated

No corrections have been made for any of the errors. Ignore income tax considerations.

The total effect of the errors on the balance of XYZs retained earnings at December 31, 2021 is overstated or understated by _______