a. Goods in transit, purchased on credit and shipped FOB destination, $10,000, were included in purchases but not in the physical count of ending inventory. b. Purchase of a machine for $2,000 was expensed. The machine has a 4-year life, no residual value, and straightline depreciation is used. c. Wages payable of $2,000 were not aocrued. d. Payment of next year's rent, $4,000, was recorded as rent expense. e. Allowance for doubttul accounts of $5,000 was not recorded. The company normally uses the aging method. t. Equipment with a book value of $70,000 and a falr value of $100,000 was soid at the beginning of the year. A2-year, non-interest-bearing note for $129,960 was recelved and recorded at its face valuo, and a gain of $59,960 was recognized. No interest revenue was recorded and 14% is B fair rate of interest. Aequired: 1. Next Level indicate the effect of each of the proceding errors on the company's assets, dabititis, shareholders' equily, and net income in the year in which the error occurs. State whether the error causes an overstatement (t), an understatement (), or no effect (NE). 2. Prepare the corrocting joumal entry or entries roquired at the beginning of the yoar for each of the preceding errors, assumting the compary discovers the emor in the year affer it was made. bnore income taxes. f(1). Record the adjustment needed to correct the sale of equipment. General Joumal Instructions How does grading work? f (2). Prepare the adjustment needed to correct interest related to the note. General Joumal instructions All transactions on this page must be entered (except for post ref(s)) before you will receive Check My Work feedback. a. Goods in transit, purchased on credit and shipped FOB destination, $10,000, were included in purchases but not in the physical count of ending inventory. b. Purchase of a machine for $2,000 was expensed. The machine has a 4-year life, no residual value, and straightline depreciation is used. c. Wages payable of $2,000 were not aocrued. d. Payment of next year's rent, $4,000, was recorded as rent expense. e. Allowance for doubttul accounts of $5,000 was not recorded. The company normally uses the aging method. t. Equipment with a book value of $70,000 and a falr value of $100,000 was soid at the beginning of the year. A2-year, non-interest-bearing note for $129,960 was recelved and recorded at its face valuo, and a gain of $59,960 was recognized. No interest revenue was recorded and 14% is B fair rate of interest. Aequired: 1. Next Level indicate the effect of each of the proceding errors on the company's assets, dabititis, shareholders' equily, and net income in the year in which the error occurs. State whether the error causes an overstatement (t), an understatement (), or no effect (NE). 2. Prepare the corrocting joumal entry or entries roquired at the beginning of the yoar for each of the preceding errors, assumting the compary discovers the emor in the year affer it was made. bnore income taxes. f(1). Record the adjustment needed to correct the sale of equipment. General Joumal Instructions How does grading work? f (2). Prepare the adjustment needed to correct interest related to the note. General Joumal instructions All transactions on this page must be entered (except for post ref(s)) before you will receive Check My Work feedback
