P $22-04$

Kingbird$$Company is in the process of adjusting and correcting its books at the end of $2020.$ In reviewing its records, the following information is compiled.

$1)$ Kingbird$$has failed to accrue sales commissions payable at the end of each of the last $2$ years, as follows.

$31-$Dec$-19$ $$3,400$

$31-$Dec$-20$ $$2,400$

$2)$ In reviewing the December $31,2020,$ inventory,$$Kingbird$$discovered errors in its inventory$-$taking procedures that have caused inventories for the last $3$ years to be incorrect, as follows.

$31-$Dec$-18$ Understated $$15,100$

$31-$Dec$-19$ Understated $$20,800$

$31-$Dec$-20$ Overstated $$6,800$

Kingbird$$has already made an entry that established the incorrect December $31,2020,$ inventory amount.

$3)$ At December $31,2020,$Kingbird$$decided to change the depreciation method on its office equipment from double$-$declining$-$balance to straight$-$line. The equipment had an original cost of $$104,000$when purchased on January $1,2018.$ It has a $10-$year useful life and no salvage value. Depreciation expense recorded prior to $2020$ under the double$-$declining$-$balance method was $$38200.$Kingbird$$has already recorded $2020$ depreciation expense of $$13800$using the double$-$declining$-$balance method.

$4)$ Before $2020,$Kingbird$$accounted for its income from long$-$term construction contracts on the completed$-$contract basis. Early in $2020,$Kingbird$$changed to the percentage$-$of$-$completion basis for accounting purposes. It continues to use the completed$-$contract method for tax purposes. Income for $2020$ has been recorded using the percentage$-$of$-$completion method. The following information is available.

Pretax Income

Percentage$-$of$-$Completion Completed$-$Contract

Prior to $2020$ $$144,600$ $$99,300$

$202059,10019,100$

Prepare the journal entries necessary at December $31,2020,$ to record the above corrections and changes. The books are still open for $2020.$ The income tax rate is$20\%.$Kingbird$$has not yet recorded its $2020$ income tax expense and payable amounts so current$-$year tax effects may be ignored. Prior$-$year tax effects must be considered in item $4.$

No Account Titles and Explanations Debit Credit

$1$

$2$

$3$

$4$