During the 2019 year-end audit, the following items come to your attention: 1. Dyke bought equipment on January 1, 2016 for $396,000 with a $30,000 estimated salvage value and a 6-year life. The company debited an expense account and credited cash on the purchase date for the entire cost of the asset. (Straight-line method) 2. During 2019, Dyke changed from the straight-line method of depreciating its cement plant to the double-declining balance method. The following computations present depreciation on both bases: Straight-line Double-declining 2019 36,500 45,900 2018 35,800 58,100 2017 35,600 72,600 The net income for 2019 was computed using the double-declining balance method, on the January 1, 2019 book value, over the useful life remaining at that time. The depreciation recorded in 2019 was $71,800. 3. Dyke, in reviewing its provision for uncollectibles during 2019, has determined that 1.00% is the appropriate amount of bad debt expense to be charged to operations. The company had used 1/2 of 1.00% as its rate in 2017 and 2018 when the expense had been $19,100 and $14,800, respectively. The company recorded bad debt expense under the new rate for 2019. The company would have recorded $7,700 less of bad debt expense on December 31, 2019 under the old rate. Prepare in general journal form the entry necessary to correct the books for the transaction in part 1 of this problem, assuming that the books have not been closed for the current year. (If no entry is required, select "No entry" for the account titles and enter o for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit Compute the net income to be reported each year 2017 through 2019. Ignore taxes. Net Income 2017 $ 2018 2019 $ Assume that the beginning retained earnings balance (unadjusted) for 2017 was $1,262,200. At what adjusted amount should this beginning retained earnings balance for 2017 be stated, assuming that comparative financial statements were prepared? Retained earnings Assume that the beginning retained earnings balance (unadjusted) for 2019 is $1,801,700 and that non-comparative financial statements are prepared. At what adjusted amount should this beginning retained earnings balance be stated? Retained earnings During the 2019 year-end audit, the following items come to your attention: 1. Dyke bought equipment on January 1, 2016 for $396,000 with a $30,000 estimated salvage value and a 6-year life. The company debited an expense account and credited cash on the purchase date for the entire cost of the asset. (Straight-line method) 2. During 2019, Dyke changed from the straight-line method of depreciating its cement plant to the double-declining balance method. The following computations present depreciation on both bases: Straight-line Double-declining 2019 36,500 45,900 2018 35,800 58,100 2017 35,600 72,600 The net income for 2019 was computed using the double-declining balance method, on the January 1, 2019 book value, over the useful life remaining at that time. The depreciation recorded in 2019 was $71,800. 3. Dyke, in reviewing its provision for uncollectibles during 2019, has determined that 1.00% is the appropriate amount of bad debt expense to be charged to operations. The company had used 1/2 of 1.00% as its rate in 2017 and 2018 when the expense had been $19,100 and $14,800, respectively. The company recorded bad debt expense under the new rate for 2019. The company would have recorded $7,700 less of bad debt expense on December 31, 2019 under the old rate. Prepare in general journal form the entry necessary to correct the books for the transaction in part 1 of this problem, assuming that the books have not been closed for the current year. (If no entry is required, select "No entry" for the account titles and enter o for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit Compute the net income to be reported each year 2017 through 2019. Ignore taxes. Net Income 2017 $ 2018 2019 $ Assume that the beginning retained earnings balance (unadjusted) for 2017 was $1,262,200. At what adjusted amount should this beginning retained earnings balance for 2017 be stated, assuming that comparative financial statements were prepared? Retained earnings Assume that the beginning retained earnings balance (unadjusted) for 2019 is $1,801,700 and that non-comparative financial statements are prepared. At what adjusted amount should this beginning retained earnings balance be stated? Retained earnings
