The answers for this problem are provided. Please explain the math/process on how to get the answers. Thank you.

Wolochuck Company is in the process of having its financial statements audited for the first time as of 12/31/17. The Company is in its 5th year of operations and has always relied on its bookkeeper to prepare annual financial statements. The auditor has found the following incorrect or overlooked items that occurred over the past 5 years.

Wolochuck purchased a machine on June 30, 2014 at a cost of $45,000. The machine has a salvage value of $3,000 and a useful life of 6 years. The bookkeeper recorded straight-line depreciation during each year, but failed to consider the salvage value.

Accumulated Depreciation............................................. 1,750

Depreciation Expense ............................................ 500

Retained Earnings.................................................. 1,250

	2014-2016	2017
Depreciation Taken	$18,750	$7,500
Depreciation (Correct)	$17,500	$7,000
	$ 1,250	$ 500

During 2017, Wolochuck changed from the straightline method of depreciation for its building to the doubledeclining balance method. The auditor provided the following computations which present depreciation on both bases:

	2017	2016	2015
Straightline	$36,000	$36,000	$36,000
Decliningbalance	$47,360	$59,200	$74,000

Depreciation Expense.................................................... 47,360

Accumulated Depreciation ........................................ 47,360

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The physical inventory count on December 31, 2016, improperly excluded merchandise costing $20,000 that had been temporarily stored in a public warehouse. Wolochuck uses a periodic inventory system.

Inventory (beginning) .................................................... Retained Earnings..................................................

20,000

20,000

A $18,000 insurance premium paid on October 1, 2016, for a policy that expires on September 30, 2019. The premium was charged to insurance expense when paid.

Insurance Expense .........................................................	6,000
Prepaid Insurance........................................................... Retained Earnings..................................................	10,500		16,500

Accrued wages of $3,500 were not recorded on December 31, 2015.

No entry, this counterbalancing error has counterbalanced as of

the end of 2016.

The auditor discovered that a sale of land on February 20, 2015 resulted in a gain of $5,000. The land was purchased in 2009 for $27,000. When the bookkeeper recorded the sale in 2015 the gain was credited to common stock.

Common Stock .............................................................. Retained Earnings..................................................

5,000

5,000

An advance payment for rent was received on January 1, 2016. The payment was for $36,000 and covers 4 years of rent for a warehouse owned by Wolochuck. When the cash payment was received the bookkeeper recorded the following entry:

Cash 36,000

Rent Payable 36,000

The Rent Payable account has not been altered since its original recording.

Rent Payable .................................................................. Unearned Rent Revenue ........................................	36,000		18,000
Rent Revenue.........................................................			9,000
Retained Earnings..................................................			9,000