Conrad Playground Supply underwent a restructuring in 2024. The company conducted a thorough internal audit, during which the following facts were discovered. The audit occurred during 2024 before any adjusting entries or closing entries are prepared.

Additional computers were acquired at the beginning of 2022 and added to the companys office network. The $49,000 cost of the computers was inadvertently recorded as maintenance expense. Computers have five-year useful lives and no material salvage value. This class of equipment is depreciated by the straight-line method.

Two weeks prior to the audit, the company paid $21,000 for assembly tools and recorded the expenditure as office supplies. The error was discovered a week later.

On December 31, 2023, merchandise inventory was understated by $86,000 due to a mistake in the physical inventory count. The company uses the periodic inventory system.

Two years earlier, the company recorded a 5% stock dividend (2,800 common shares, $1 par) as follows:

Account Name	Debit	Credit
Retained earnings	2,800
Common stock		2,800

The shares had a market price at the time of $11 per share.

At the end of 2023, the company failed to accrue $120,000 of interest expense that accrued during the last four months of 2023 on bonds payable. The bonds, which were issued at face value, mature in 2028. The following entry was recorded on March 1, 2024, when the semiannual interest was paid, as well as on September 1 of each year:

Account Name	Debit	Credit
Interest expense	180,000
Cash		180,000

A three-year liability insurance policy was purchased at the beginning of 2023 for $74,400. The full premium was debited to insurance expense at the time.

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