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Question 3: Accounting Errors (6 marks) SPECIFIC INSTRUCTIONS: Only the BLUE CELLS will be marked. All journal entries must have Debits listed first before Credits.

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Question 3: Accounting Errors (6 marks) SPECIFIC INSTRUCTIONS: Only the BLUE CELLS will be marked. All journal entries must have Debits listed first before Credits. Use the description under the date to help with the ordering of the journal entries. You have been engaged to audit the financial statements of Hopewell Ltd. for the year ended December 31, 2020. The company follows IFRS. In examining the books, you became concerned with the following item: The bookkeeper, in recording interest expense for both 2019 and 2020 on bonds payable, made the following entry each year: Account Title Debit Credit Interest expense 15,000 Cash 15,000 The bonds mature in 5 years, have a face value of $250,000 and pay a stated interest rate of 6%. They were issued at a discount of $10,250 on January 1, 2019 to yield an effective interest rate of 7%. Interest is paid annually each December 31. From the correctly prepared amortization schedule, you obtain the following: Date Interest expense Amortization amount Carrying Value 1-Jan-191 31-Dec-191 31-Dec-20 16,783 16,907 1,783 1,907 239,750 241,533 243,440 REQUIRED: Prepare the journal entries that the company's bookkeeper would prepare in 2020, assuming the errors are discovered while the 2020 books are still open. Ignore any income tax effects. The company uses contra-accounts for any bond discount/premium. Date Account Title Debit Credit Jan. 1/20 Interest Expense Past Cash Dec. 31/20 Interest Expense Current Cash

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