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Please view the screenshot and assist. Sales COGS Gross Margin Operating Expenses Other Income/Expenses Net Income b4 Taxes Income Tax Expense Net Income GAAP 825,000
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Sales COGS Gross Margin Operating Expenses Other Income/Expenses Net Income b4 Taxes Income Tax Expense Net Income GAAP 825,000 375,000 245,000 127,550 23,636 103,915 Tax 825,000 375,000 260,000 112,550 tax rate 112,550 There were material errors that were found after the books that had been closed and need to be corrected. Depreciation on equipment bought in September 1 costing $27,000 had not been recorded. GAAP depreciation = $3,600 and Tax depreciation = $3,858 Supply usage had not been recorded. The supplies on hand at the end ofthe year were $7,200 on the books, but the supplies ending amount after the physcial count was $1 ,300_ This difference needs to be recorded for GAAP and Tax both. A computer purchased for $525 had been capitalized - it should have been expensed. The GAAP depreciaion recorded was $42 and the tax depreciation recorded was $52 Create the correction entry for GAAP as of January 1 and create the amended tax income statement after the corrections have been recorded (check figure: on GAAP entry - debit to retained earnings = 7,834 debit)
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