(Error Corrections)

1) As part of an internal audit, the following fact was discovered. The audit occurred during 2018 before any adjusting entries or closing entries were prepared.

A five-year casualty insurance policy was purchased at the beginning of 2016 for $35,000. The full amount was debited to insurance expense at the time. Prepare all necessary entries (or an entry) in 2018.

2) A machine with a five-year life was purchased on January 1, 2017. The machine cost $20,000 and has no expected salvage value. No depreciation was taken in 2017 or 2018. Assume the straight-line method for depreciation. Prepare all necessary entries (or an entry) in 2018.

3) During 2018, WMC Corporation discovered that its ending inventories reported on its financial statements were misstated by the following amounts:

2016 understated by $120,000

2017 overstated by $150,000

WMC uses the periodic inventory system and the FIFO cost method. Assume no error was corrected in 2016 or 2017. Prepare all necessary entries (or an entry) in 2018.

4) On the last day of 2017, Midwest Importers received a $90,000 prepayment from a tenant for 2018 rent of a building. Midwest recorded the receipt as rent revenue. Prepare all necessary entries (or an entry) in 2018.