In addition, James did not change the standard journal entry for monthly depreciation to reflect additions and disposals during the year. As a result depreciation expense for the year is understated by $800,000. Brony's Bikes depreciates factory equipment on a straight-line basis over a ten-year estimated useful life with zero salvage value. One-half year's depreciation is taken on all additions and disposals. Draft Audit Adjustment 11 at the bottom of WP 11.4 to reflect the depreciation understatement. In recording the under-depreciation, debit account 5300 "Cost of Goods Sold - Pike's Peak Mountain Bike," inasmuch as all overhead accounts have been closed. Any further adjustments, therefore, must be reflected in the cost of sales accounts. Although in Module IV we allocated the adjustment to the five product cost of sales accounts, the present adjustment is less significant in amount, and therefore we will reflect the entire amount in account 5300. (Note: Don't forget to enter Audit Adjustments 1, 10, and 11 in the body of the document to arrive at correct adjusted balances.) 3. Scroll to WP 11 "Plant Assets and Accumulated Depreciation - Lead Schedule." Post Audit Adjustments 10 and 11 to the lead schedule