The accountant has made the following calculations and journal entries to record the following transactions. There are numerous errors. You will need to find the calculation and/or journal entries that are incorrect, write the correct answer, showing your work and/or correct journal entry and explain how the accountants errors would affect the financial statements.

For example, if the story stated that revenue was $57,500, but the accountant recorded the revenue as $75,500, you will need to write the correct journal entry, then explain that the error would overstate the revenue on the Income Statement and cause Net Income to be too high. The wrong Net Income would be included on the Statement od Stockholders Equity resulting in Retained Earnings being too high. Retained earnings is included on the Balance Sheet and therefore, overstate Equity and assets.

Journal paper and a space to write the effects of the accountants errors has been provided below. Journal paper does NOT indicate that the journal entry is correct or incorrect or how many accounts are involved.

The accountant for SpaceX received the following information and made the journal entry. On Sept. 1, 2020, SpaceX purchased land, a building, and equipment for one price of $2,860,000. The estimated fair values of the land, building, and equipment are $778,800, $1,486,800, and $1,274,400, respectively. SpaceX issued a $2,860,000, 5%, six-year note to make this purchase. The monthly payment is $51,639, which includes principal and interest payments. The building is depreciated using straight-line and has a salvage value of $4,800. The equipment is depreciated using double-decline and has a salvage value of $9,600. Both have a useful life of 10 years.

1. Date Account Debit Credit 9/1 Land 778,800 Building 1,486,800 Equipment 1,274,400 Gain on Purchase 680,000 Cash 2,860,000

Date Account Debit Credit

2. Date Account Debit Credit 9/1 Cash 2,860,000 Loan Payable 2,860,000 9/30 Loan Payable 51,639 Cash 51,639

Date Account Debit Credit

3. Depreciation Building ($1,486,800 4,800)/120 months = $12,350 Equipment = ($1,274,400 9,600)/120 = $10,540 x 2 = $21,080 Land = ($ 778,800 0)/120 = 6,490

Date Account Debit Credit 9/30 Depreciation Expense-Building 12,350 Accumulated Depreciation-Building 12,350 Depreciation Expense-Land 6,490 Accumulated Depreciation-Land 6,490 Depreciation Expense-Equipment 21,080 Accumulated Depreciation-Equipment 21,080

Date Account Debit Credit

4. Also on Sept. 1, 2020, SpaceX sold an old piece of machinery for $6,795. The original price of the machinery was $30,000, accumulated depreciation is up-to-date and totals $22,500.

Date Account Debit Credit 9/1 Cash 30,000 Accumulated Depreciation 22,500 Gain 6,795 Machinery 30,000

Date Account Debit Credit

5. Finally, SpaceX issued a $2,000,000 of 6% bonds, due in ten years, with interest payable semi-annually on Sept. 30 and March 31 each year. The market interest rate is 5% the bonds will issue at $2,155,892.

Date Account Debit Credit 9/1 Cash 2,155,892 Bond Payable 2,155,892 9/30 Interest Expense 53,897.30 Cash 53,897.30

*2,155,892 x .05 x = 53,897.30

Date Account Debit Credit