Question
Shooting Star was formed in 2018 and is undergoing an audit for the first time for the year ended 12/31/2020. As part of the audit
Shooting Star was formed in 2018 and is undergoing an audit for the first time for the year ended 12/31/2020. As part of the audit it was discovered that $30,000 debited to repairs & maintenance expense at the beginning of 2018 should have been capitalized as leasehold improvements. Since the 2018 & 2019 financial statements were not public, the change will be reported on the 2020 financial statements as a prior period adjustment. Using a 30% tax rate, give the necessary journal entries related to correcting 2018 & 2019. Leasehold improvements are depreciated over 15 years.
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