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Exercise 2 0 - 2 1 ( Algo ) Error in amortization schedule [ LO 2 0 - 6 ] Wilkins Food Products Inc. acquired
Exercise Algo Error in amortization schedule LO
Wilkins Food Products Inc. acquired a packaging machine from Lawrence Specialists Corporation. Lawrence completed construction of the machine on January In payment for the machine Wilkins issued a threeyear installment note to be paid in three equal payments at the end of each year. The payments include interest at the rate of Lawrence made a conceptual error in preparing the amortization schedule, which Wilkins failed to discover until As a result of the error, Wilkins understated interest expense by $ in and $ in
Required:
Indicate in the table below which accounts are incorrect as a result of these errors at January and whether those accounts are understated or overstated. Ignore income taxes.
Prepare a journal entry to correct the error.
Will Wilkins account for the error a retrospectively or b prospectively?
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