In 2021, Internal auditors discovered that PKE Displays, Inc. had debited an expense account for the $351,000 cost of equipment purchased on January 1, 2018. The equipment's life was expected to be five years with no residual value. Straight-line depreciation is used by PKE Required: 1. Determine the cumulative effect of the error on net income over the three-year period from 2018 through 2020, and on retained earnings by the end of 2020. 2. Prepare the correcting entry assuming the error was discovered in 2021 before the adjusting and closing entries. (Ignore income taxes.) 3. Assume instead that the equipment was disposed of in 2022 and the original error was discovered in 2023 after the 2022 financial statements were issued. Prepare the correcting entry in 2023. Answer is not complete. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Determine the cumulative effect of the error on net income over the three-year period from 2018 through 2020, and on retained earnings by the end of 2020. $ Net income over the period 2018 through 2020 is Retained earnings by the end of 2020 is understated understated by by 70,200 70,200 $ Required Required 2 > In 2021, internal auditors discovered that PKE Displays, Inc. had debited an expense account for the $351,000 cost of equipment purchased on January 1, 2018. The equipment's life was expected to be five years with no residual value. Straight-line depreciation is used by PKE Required: 1. Determine the cumulative effect of the error on net income over the three-year period from 2018 through 2020, and on retained earnings by the end of 2020, 2. Prepare the correcting entry assuming the error was discovered in 2021 before the adjusting and closing entries. (Ignore income taxes.) 3. Assume instead that the equipment was disposed of in 2022 and the original error was discovered in 2023 after the 2022 financial statements were issued. Prepare the correcting entry in 2023. Answer is not complete. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Prepare the correcting entry assuming the error was discovered in 2021 before the adjusting and closing entries. (Ignore income taxes.) (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) No Event General Journal Credit Dobit 351,000 1 1 Equipment Cash x 351,000 In 2021, internal auditors discovered that PKE Displays, Inc. had debited an expense account for the $351,000 cost of equipment purchased on January 1, 2018. The equipment's life was expected to be five years with no residual value. Straight-line depreciation is used by PKE Required: 1. Determine the cumulative effect of the error on net income over the three-year period from 2018 through 2020, and on retained earnings by the end of 2020. 2. Prepare the correcting entry assuming the error was discovered in 2021 before the adjusting and closing entries. (Ignore income taxes.) 3. Assume instead that the equipment was disposed of in 2022 and the original error was discovered in 2023 after the 2022 financial statements were issued. Prepare the correcting entry in 2023. Answer is not complete. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Assume instead that the equipment was disposed of in 2022 and the original error was discovered in 2023 after the 2022 financial statements were issued. Prepare the correcting entry in 2023. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Debit No Event Credit 351,000 1 1 General Journal Equipment Accumulated depreciation Retained earnings Required 2 Required
