I need help with E 20-20
CHAPTER 20 Accounting Changes and Error Corrections 1201 . Change from declining balance depreciation to str 2. Change in the estimated useful life of office equipment. straight-line 3. Technological advance that renders worthless a patent with an unamortized cost of $45,000. . Change from determining lower of cost or net realizable value (LCNRV) for the inventories by the individual item a roach to the aggregate approach. 5. C 6. S entory costing to the weighted-average inventory costing. less than the am ount accrued previously a 7. Including in the consolidated financial statements a subsidiary acquired several years earlier that was appropriately not included in previous years. 8. Change by a retail store from reporting warranty expense on a pay-as-you-go basis to estimating the expense in the period of sale. 9. A shift of certain manufacturing overhead costs to inventory that previously were expensed as incurred to more accurately measure cost of goods sold. (Either method is generally acceptable.) _ 10. Pension plan assets for a defined benefit pension plan achieving a rate of return in excess of the amount anticipated. E 20-19 Error correction; During 2021, WMC Corporation discovered that its ending inventories reported on its financial statements were inventory error misstated by the following amounts: . LO20-6 2019 $120,000 2020 understated by overstated by 150,000 WMC uses the periodic inventory system and the FIFO cost method. Required: Determine the effect of these errors on retained earnings at January 1, 2021, before any adjustments. (Ignore income taxes.) . Prepare a journal entry to correct the error in 2021. . Will WMC account for the error (a) retrospectively or (b) prospectively? E 20-20 On December 12, 2021, an investment in equity securities costing $80,000 was sold for $100,000. The total of the Error corrections; sale proceeds was credited to the investment in equity securities account. investment LO20-6 Required: 1. Prepare the journal entry to correct the error, assuming it is discovered before the books are adjusted or closed in 2021. (Ignore income taxes.) 2. Prepare the journal entry to correct the error assuming it is not discovered until early 2022. (Ignore income taxes. E 20-21 Wilkins Food Products Inc. acquired a packaging machine from Lawrence Specialists Corporation. Lawrence Error in completed construction of the machine on January 1, 2019. In payment for the machine Wilkins issued a three- amortization year installment note to be paid in three equal payments at the end of each year. The payments include interest a schedule the rate of 10%. Lawrence made a conceptual error in preparing the amortization schedule, which Wilkins failed to . LO20-6 discover until 2021. As a result of the error, Wilkins understated interest expense by $45,000 in 2019 and $40,000 in 2020. Required: 1. Determine which accounts are incorrect as a result of these errors at January 1, 2021, before any adjustments. Explain your answer. (Ignore income taxes.) 2. Prepare a journal entry to correct the error. 3. Will Wilkins account for the error (a) retrospectively or (b) prospectively? E 20-22 At the end of 2020, Majors Furniture Company failed to accrue $61,000 of interest expense that accrued during Error correction; the last five months of 2020 on bonds payable. The bonds mature in 2032. The discount on the bonds is amortized accrued interest by the straight-line method. The following entry was recorded on February 1, 2021, when the semiannual interest on bonds was paid: . LO20-6 Interest expense ........... 73,200 Discount on bonds payable .... 1,200 Cash ....... 72,000 Required: Prepare any journal entry necessary to correct the error, as well as any adjusting entry for 2021 related to the sit- uation described. (Ignore income taxes.)
