For each of the following independent findings, indicate if there is an error and the account(s) affected, whether these accounts are under/overstated, and possible adjusting entry to correct the misstatement, if required.

Assume a December 31 year end.

Case #1 During the year, ABC Heating and Air Conditioning sold off all the air conditioning equipment because it will be discontinuing servicing air conditioning. The equipment was sold to a neighbouring business, which paid $400 000. The equipment was about 10 years old cost $1.0 million and was 90% depreciated. The following entry was recorded for the sale

DR Cash 400 000

CR Air conditioning Equipment 400 000

Case #2 Sales of $80 000 were recorded on goods that were shipped after year-end and included in the year-end inventory count.

The cost of these goods was $50 000.

Case #3 A lawyers bill for services rendered ($12, 000) in November was not paid or accrued.

Case #4 Outstanding cheques totalling $50 000 were deducted from the cash balance on December 16, but deliberately not mailed out to avoid a bank overdraft over the holidays. The cheques were in payment of various raw material supplier accounts (Trade accounts payable).