Barts Company has prepared the PP&E and depreciation schedule shown in Exhibit 8.54.1 below.

The following information is available (assume the beginning balance has been audited):

The land was purchased eight years ago when building 1 was erected. The location was then remote and now borders a major freeway. The appraised value of the land is $35 million.

Building 1 has an estimated useful life of 35 years and no residual value.

Building 2 was built by a local contractor this year. It has also an estimated useful life of 35 years and no residual value. The company occupied it on May 1 this year.

Computer A system was purchased January 1 six years ago when the estimated useful life was 8 years with no residual value. Sold on May 1 for $500,000.

Computer B system was placed in operation as soon as Computer A system was sold. It is estimated to be in use six years with no residual value at the end.

The company estimated the useful life of the press at 20 years with no residual value.

Auto 1 was sold during the year for $1000.

Auto 2 was purchased on July 1. The company expects to use it five years and then sell it for $2000.

All depreciation is calculated on the straight-line method using months of service.

Exhibit 8.54.1 PP&E And Depreciation

Asset Costs (000s) Accumulated Depreciation (000s)

Beginning Ending Beginning Ending

Description Balance Added Sold Balance Balance Added Sold Balance

Land 10,000 10,000

Building 1 30,000 30,000 6,857 857 7714

Building 2 42,000 42,000 800 800

Computer A 5,000 5,000 0 3,750 208 3,958 0

Computer B 3,500 3,500 583 583

Press 1,500 1,500 300 150 450

Auto 1 15 15 0 15 15 0

Auto 2 _______ ____22 ____ ____22 ______ ____2 _______ 2

Total 46,515 45,522 5,015 87,022 10,922 2,600 3,973 9,549

REQUIRED:

Verify the depreciation calculations. Are there any errors? Put the errors in the form of an adjusting journal entry, assuming that 90 percent of the depreciation on the buildings and the press has been charged to the Cost of Goods Sold and 10 percent is still capitalized in the inventory, and the other depreciation expense is classified as General and Administrative Expense (i.e., building and press depreciation is considered a product cost; inventory on hand includes 10 percent of the depreciation expense for the buildings and the press: $180,700; Cost of Goods Sold contains the other 90 percent: $1,626,300). (If no entry is required for a transaction/event, select No journal entry required. Do not round intermediate calculations. Round your answers to the nearest whole dollar amount. Enter your answers in dollars and not in millions or thousands of dollars.)

Record the rectification of depreciation calculation.