Larkin Incorporated is a wholesale distributor of computer parts. In 2024, the following situations occurred or were discovered:

a. Internal auditors discovered that ending inventories reported on the financial statements of the two previous years were misstated due to faulty internal controls. The errors were in the following amounts:

2022 inventory Understated by $12,000 2023 inventory Overstated by $10,000

b. A patent costing $20,000 at the beginning of 2022 was expected to benefit operations for a total of 10 years. The entire amount was debited to patents. However, the patent has not been amortized since it was acquired.

c. Larkins equipment was depreciated by the sum-of-the-years-digits (SYD) basis since it was acquired at the beginning of 2022 at a cost of $60,000. It has an expected useful life of five years and no expected residual value. At the beginning of 2024, Larkin decided to switch to straight-line depreciation.

d. A five-year casualty insurance policy was purchased at the beginning of 2022 for $35,000. The full amount was debited to insurance expense at the time. No adjusting entries were made regarding the casualty insurance policy.

e. At the end of 2023, the company failed to accrue salaries of $20,000. The expense was recorded in 2024 when the salaries were paid.

Larkins books are closed for 2022 and 2023 but are still open in 2024.

INSTRUCTIONS: For each situation, prepare any journal entry necessary as a direct result of the change or error correction, as well as any adjusting entry required for 2024 related to each situation described. Don't forget to show how you got to your answer! (Ignore income taxes.)