Question
Dudley Company failed to recognize the following accruals. It also recorded the prepaid expenses and unearned revenues as expenses and revenues, respectively, in the following
Dudley Company failed to recognize the following accruals. It also recorded the prepaid expenses and unearned revenues as expenses and revenues, respectively, in the following year when paid or collected.
2018 | 2019 | 2020 | |
Prepaid Insurance | $500 | $900 | $1,100 |
Estimated Warranty Liability | 800 | 700 | 950 |
Rent Revenue received in advance | 300 | 400 | 1,300 |
Interest earned but not received | 600 | 1,000 | 1,200 |
The reported pretax income was $20,000 in 2018, $25,000 in 2019, and $23,000 in 2020.
Required:
2. | Prepare the journal entries necessary in 2020 if the errors are discovered at the end of that year. Ignore income taxes. |
| 3. Prepare the journal entries necessary in 2018 if the errors are discovered at the end of that year. Ignore income taxes. |
2. Prepare one compound journal entry necessary on December 31, 2020 if the errors are discovered at the end of that year.
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3. Prepare one compound journal entry necessary on December 31, 2018 if the errors are discovered at the end of that year. Ignore income taxes.
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