LEFT column options

Cash, Notes Payable, Retained Earnings, Interest Expense, Amortization Expense

Wilkins Food Products Inc. acquired a packaging machine from Lawrence Specialists Corporation. Lawrence completed construction of the machine on January 1, 2019. In payment for the machine Wilkins issued a three-year installment note to be paid in three equal payments at the end of each year. The payments include interest at the rate of 15%. Lawrence made a conceptual error in preparing the amortization schedule, which Wilkins failed to discover until 2021. As a result of the error, Wilkins understated interest expense by $62,000 in 2019 and $57,000 in 2020. Required: 1. Indicate in the table below which accounts are incorrect as a result of these errors at January 1, 2021 and whether those accounts are understated or overstated. (Ignore income taxes.) 2. Prepare a journal entry to correct the error. 3. Will Wilkins account for the error (a) retrospectively or (b) prospectively? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Indicate in the table below which accounts are incorrect as a result of these errors at January 1, 2021 and whether those accounts are understated or overstated. (Ignore income taxes.) Indicate in the table below which accounts are incorrect as a result of these errors at January 1, 2021 and whether those accounts are understated or overstated. (Ignore income taxes.) 2019 2020 Account Cash Notes payable Retained earnings x Understated X Overstated X Overstated X Understated X Overstated Overstated Understated Understated X Understated Overstated X Notes payable Interest expense Wilkins Food Products Inc. acquired a packaging machine from Lawrence Specialists Corporation. Lawrence completed construction of the machine on January 1, 2019. In payment for the machine Wilkins issued a three-year installment note to be paid in three equal payments at the end of each year. The payments include interest at the rate of 15%. Lawrence made a conceptual error in preparing the amortization schedule, which Wilkins failed to discover until 2021. As a result of the error, Wilkins understated interest expense by $62,000 in 2019 and $57,000 in 2020. Required: 1. Indicate in the table below which accounts are incorrect as a result of these errors at January 1, 2021 and whether those accounts are understated or overstated. (Ignore income taxes.) 2. Prepare a journal entry to correct the error. 3. Will Wilkins account for the error (a) retrospectively or (b) prospectively? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Indicate in the table below which accounts are incorrect as a result of these errors at January 1, 2021 and whether those accounts are understated or overstated. (Ignore income taxes.) Indicate in the table below which accounts are incorrect as a result of these errors at January 1, 2021 and whether those accounts are understated or overstated. (Ignore income taxes.) 2019 2020 Account Cash Notes payable Retained earnings x Understated X Overstated X Overstated X Understated X Overstated Overstated Understated Understated X Understated Overstated X Notes payable Interest expense