Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Please read the question carefully before answering, all help is appreciated thank you :) On May 5, 2024, you were hired by Crane Inc., a
Please read the question carefully before answering, all help is appreciated thank you :)
On May 5, 2024, you were hired by Crane Inc., a closely held company that follows ASPE, as a staff member of its newly created internal auditing department. While reviewing the company's records for 2022 and 2023 , you discover that no adjustments have yet been made for the items listed below. 1. Interest income of $14,288 was not accrued at the end of 2022. It was recorded when received in February 2023. 2. Equipment costing $13,680 was expensed when purchased on July 1,2022 . It is expected to have a four-year life with no residual value. The company typically uses straight-line depreciation for all fixed assets. 3. Research costs of $27,360 were incurred early in 2022. They were capitalized and were to be amortized over a three-year period. Amortization of $9,120 was recorded for 2022 and $9,120 for 2023 . For tax purposes, the research costs were expensed as incurred. 4. On January 2,2022 , Crane leased a building for five years at a monthly rental of $6,840. On that date, Crane paid the following amounts, which were expensed when paid for both financial reporting and tax purposes: 5. The company received $31,920 from a customer at the beginning of 2022 for services that it is to perform evenly over a three-year period beginning in 2022. None of the amount received was reported as unearned revenue at the end of 2022. The $31,920 was included in taxable income in 2022. 6. Merchandise inventory costing $12,768 was in the warehouse on December 31,2022 , but was incorrectly omitted from the physical count at that date. The company uses the periodic inventory method. Crane follows the taxes payable method of accounting for income taxes. Enter the appropriate dollar amounts in the appropriate columns to indicate the effect of any errors on the net income figure reported on the income statement for the year ended December 31,2022, and the retained earnings figure reported on the statement of financial position at December 31,2023 . Assume that all amounts are material and that an income tax rate of 25% is appropriate for all years. Assume also that each item is independent of the other items. You do not need to total the columns on the grid. (Do not leave any answer field blank. Enter O for amounts. Round answers to 0 decimal places, e.g. 5,125.)Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started