2,364 2,364 Purchase 166 x 61 12/18 sold 189 = 189 x 60 = 11,340 COGS = $6,780 + 780 + 11,340 = $18,900 Ending Inventory = (185 units x $60) + (166 x $61) = 21,226 1.033.20 12/31 Depreciation Expense Accumulated Depreciation 12/31 Bad Debt Expense Allowance for Uncollectible Accounts 12/31 Rent Expense Prepaid Rent 1,533.20 ACCT& 201 Project The accountant has made the following journal entries to record the following transactions. There are numerous errors. You will need to find the journal entries that are incorrect, write the journal entry correctly and explain how the accountant's errors would affect the financial statements. Joumal paper and a space to write the effects of the accountant's errors has been provided below. The number of provided space for journal entries does NOT indicate how many errors are present. Please download this Word document, do the assignment and submit it to me through the module titled "Project". I recommend looking at each dated transaction and compare it to the journal entry made to decide if each journal entry is correct or incorrect. 400 400 90,000 90,000 Credit 4,800 Date 12/31 Debit 36,120 4.800 25,440 36,120 25,440 30,322.20 30,000 30,000 For example, if the story stated that revenue was $57,500, but the accountant recorded the revenue as $75,500, you will need to write the correct journal entry, then explain that the error would overstate the revenue on the Income Statement and cause Net Income to be too high. The wrong Net Income would be included on the Statement od Stockholders' Equity resulting in Retained Eamings being too high. Retained earnings is included on the Balance Sheet and therefore, overstate Equity and assets. 1,800 Account Revenue Retained Earings Retained Eamings COGS Rent Expense Salaries Expense Advertising Expense Depreciation Expense Utilities Expense Supplies Expense Bad Debt Expense 1,800 11,865 12.120 400 10,400 1,800 2.364 1.300 905 1033.20 11,865 1,365 1,365 780 780 10,000 10,000 5,200 5,200 1,800 Credit Debit Date Account 12/1 Cash Common Stock 12/1 Prepaid Rent Cash 12/1 Equipment Loan Payable 12/2 Merchandise Inventory A/P 12/8 Supplies Accounts Payable 12/12 Cash Revenue 12/14 A/R Revenue COGS Merchandise Inventory 12/14 Merchandise Inventory A/P 12/15 Salaries expense Cash 12/15 Accounts Payable Cash 12/18 Cash A/R Revenue 12/18 COGS Merchandise Inventory 12/20 Advertising Expense Cash 12/22 Cash Revenue 12/23 A/P Cash 12/25 A/R Cash 12/31 Utilities Expense Utilities Payable 12/31 Salaries Expense Salaries Payable 12/31 Supplies Expense Supplies 1,800 Dec. 1 2020, started business by issuing 20,000 shares of common stock for $90,000. Dec. 1 Rented a building for three years at $800 per month and paid six months' rent in advance. Dec. 1 Purchased equipment for $25,440 with a 2-year loan at 4% interest (loan and interest will be due at the end of the 2-year loan agreement) The equipment has a useful life of 10 years and a residual value of $1,800. Straight line depreciation will be used. Dec. 2 Purchased merchandise inventory for $30,000 on account (500 units @ $60 per unit) Dec. 8 Purchased $1,800 of supplies on account. Dec. 12 Sold inventory to customers for $11,865 cash. (113 x $105) Dec. 14 Sold inventory to customers for $1,365 on account. (13 x 105) Dec. 14 Purchased merchandise Inventory for $10,126 (166 units @ $61 per unit) on account Dec. 15 Paid employees' salaries, $5,200. Dec. 15 Paid for supplies purchased on Dec. 8 Dec. 18 Sold inventory to customers for $7,665 in cash and $12, 180 on account Dec. 20 Paid $1,800 for current advertising in a local newspaper, Dec. 22 Received $3,045 in cash in advance from customer, inventory will be delivered to the customer next month Dec. 23 Paid full amount for merchandise inventory purchased on Dec. 2 Dec. 25 Received $3,675 from customers paying on their accounts Dec. 31 Received September utility bill of $1,300, will pay it next month. Dec. 31 Owes employee salaries of $5,200 that will be paid Oct. 1 Dec. 31 There are $905 supplies on hand 7,665 12,180 19.845 11,340 11.340 1,800 1.800 3,045 3,045 30,000 30.000 3,675 3,675 1,300 Debit Credit 1,300 Date Account 1. Bad debt is estimated to be 6% of total A/R 5,200 5,200 905 905 2. The company uses LIFO to cost its inventory The accountants calculations for total COGS and ending inventory Purchase 500 x $60 12/12 Sold 113 x 60 = $6,780 12/14 Sold 13 x 60 = $780