Question
Holmes Limited purchases a delivery truck for $14,000 on January 1, 2019. Holmes expects to use the truck for only two years and then sell
Holmes Limited purchases a delivery truck for $14,000 on January 1, 2019. Holmes expects to use the truck for only two years and then sell it for $4,000. The accountant is instructed to use straight-line depreciation but neglects to record any depreciation in 2019. Rather, the accountant charges the entire cost to delivery expense in 2019. The company controller discovers the error late in 2020.
Required:
Provide the 2020 entries to record depreciation and the error correction. Assume a tax rate of 30%.
2020 | Debit | Credit |
To record depreciation expense | ||
To record the error correction | ||
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Financial Reporting and Analysis
Authors: Flawrence Revsine, Daniel Collins, Bruce, Mittelstaedt, Leon
6th edition
9780077632182, 78025672, 77632184, 978-0078025679
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