2)Alpha bought equipment on 1/1/15 at a cost of $350,000. The equipment has a useful life of 7 years and no salvage value. The accountant recording the purchase charged the full amount to repairs and maintenance expense. The error was discovered on 1/1/17. Because of the error, is retained earnings on 1/1/17 correct or incorrect? (if incorrect, is it too high or too low and by what amount?)

3)How about the balance of total assets on 1/1/17 because of the error? Because of the error, are total assets on 1/1/17 correct or incorrect? (if incorrect, are they too high or too low and by what amount?)

4)Now assume that the error is not discovered until 1/1/25, are R.E. and total assets still wrong on 1/1/25?

5)Beta purchased an insurance policy on 1/1/15 and paid a five-year premium for $200,000. The full purchase price was recorded immediately as Insurance Expense. The error was discovered on 1/1/18. Prepare the J.E. that would correct assets and retained earnings as of 1/1/18.

6)In April, 2016, Gamma sold securities for $86,000. It had originally purchased these securities for $45,000. By mistake, Gamma debited cash and credited investments for $86,000. The error was caught the following day (before books closed). Prepare the J.E. that would correct this error without having to reverse the original journal entry.

7)Beta discovered ending inventory errors in 2015 and 2016. The 2015 ending inventory was overstated by $205,000 whereas the 2016 ending inventory was understated by $75,000. Ignoring taxes, by what amount should the beginning retained earnings be adjusted on January 1, 2017?

8) Using the same information in the previous problem, now assume that, in addition to the previously described inventory errors, depreciation expense was understated by 15,000 in 2015 and overstated by 20,000 in 2016. By what amount should beginning R.E. balance be adjusted on 1/1/17?

9)In 2015, Epsilon incorrectly recorded ending inventory as $970,000 instead of $790,000. The error was discovered on 1/1/16. Tax rates for all years is 40%. By what amount and direction (increase or decrease) should R.E. be adjusted on 1/1/16?