P22-3 (Error Corrections and AccountingChanges) Patricia Voga Companyis in the process of

adjusting and correcting its books at the end of2008. In reviewing its records, the followinginformation

is compiled.

1. Voga has failed toaccrue sales commissions payable at the end of each of the last 2years, as

follows.

December 31, 2007 $4,000

December 31, 2008 $2,500

2. In reviewing theDecember 31, 2008, inventory, Voga discovered errors in itsinventory-taking

procedures that have caused inventories for thelast 3 years to be incorrect, as follows.

December 31, 2006 Understated $16,000

December 31, 2007 Understated $21,000

December 31, 2008 Overstated $ 6,700

Voga has already made an entry that establishedthe incorrect December 31, 2008, inventoryamount.

3. At December 31, 2008,Voga decided to change the depreciation method on its officeequipment

from double-declining balance to straight-line.The equipment has an original cost of $100,000

when purchased on January 1, 2006. it has a10-year useful life and no salvage value.Depreciation

expense recorded prior to 2008 under thedouble-declining balance method was $36,000. Voga

has already recorded 2008 depreciation expense of$12,800 using the double-declining balance

method.

4. Before 2008, Vogaaccounted for its income from long-term construction contracts onthe completedcontract

basis. Early in 2008, Voga changed to thepercentage-of-completion basis for accounting

purposes. It continues to use thecompleted-contract method for tax purposes. Income for 2008has

been recorded using the percentage-of-completionmethod. The following information (on page

1199) is available.

Pretax Income

Percentage-of-Completion Completed-Contract

Priorto2008 $150,000 $95,000

2008 60,000 20,000

Instructions

Prepare the journal entries necessary at December31, 2008, to record the above corrections andchanges.

The books are still open for 2008. The income taxrate is 40%. Voga has not yet recorded its 2008income

tax expense and payable amounts so current-yeartax effects may be ignored. Prior-year tax effectsmust

be considered in item 4.