Q3. The following errors were discovered during the first ever audit of the records of Solomon Co for the year ended 12/31/2021. The books have not been closed for 2021. All correcting entries are dated 12/31/2021. In each case use a single entry to fully reflect correct balances in all accounts. 1 At the beginning of 2018, the company purchased a machine for $45,000 (no salvage value) that had a useful life of 6 years. The bookkeeper expensed the full cost of the machine when purchased. 2 Solomon Company purchased a patent with an estimated useful life of 10 years in early January 2017 for $70,000. Solomon did not amortize the patent for 2017 and 2018 because its value increased dramatically in those years. Solomon did properly record amortization of $7,000 annually for 2019 and 2020. The company has not yet recorded amortization expense for 2021. At the end of 2021, there is overwhelming evidence that the patent will be worthless by the end of 2024. Under U.S. GAAP, the patent should be fully amortized by the end of 2024 to reflect the asset's revised useful life. 3 In 2020, the company sold for $5,300 fully depreciated equipment that originally cost $32,000. The company credited the proceeds from the sale to the Accumulated Depreciation account. 4 During November 2020, a competitor company filed a patent-infringement suit against Solomon claiming damages of $220,000. The company's legal counsel has indicated that an unfavorable verdict was highly unlikely and that, if the Solomon did lose the case, a reasonable estimate of the court's award to the competitor was $125,000. The company reported this situation in the 2020 the financial statements through a debit to Loss-Patent Infringement $125,000 and a credit to Accrued Obligation - Patent Infringement $125,000. In fact, Solomon did lose the case in late 2021 for a judgement of $130,000. Solomon chose not to appeal. 5 A $120,000 insurance premium was paid on July 1, 2019, for a policy that expires on June 30, 2022. On July 1, 2019, the bookkeeper recorded the cash payment to Insurance Expense $40,000 (debit) and Prepaid Insurance $80,000 (debit). There have been no subsequent entries related to this insurance policy