Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The first audit of the books of Cullumber Company was made for the year ended Docember 31, 2021. In examining the books, the auditor found

image text in transcribed
The first audit of the books of Cullumber Company was made for the year ended Docember 31, 2021. In examining the books, the auditor found that certain items had been overlooked or incorrectly handied in the last 3 years. These items are: 1. At the beginning of 2019, the company purchased a machine for 3555,000 (salvage value of $55,500 that had a usefullife of 6 years. The bookkeeper used straight-line depreciation but taled to deduct the salvage value in computing the depreciation base for the 3 vears. 2. At the end of 2020 , the company falied to accrue sales salaries ch b. , woo. 3. A tax liwsuit that involved the year 2019 was settied late in 2021 it was determined that the company owed an additional $87,000 in taws related to 2019 . The company did not record a liability in 2019 or 2020 because the possibility of loss was considered remote, and charged the 587,000 to a loss account in 2021 4. Cullumber Company purchaved a copvright from another company early in 2019 for \$55,000, Cullumber had not amortized the copyright because its value had not diminished, The copyright has a vieful life at purchase of 20 years. 5. In 2021 , the compary wrote off $90000 of inventory considered to be obsolete: this loss was charged directly to Retained Earnings. Prepare the journal entries necessary in 2021 to correct the books, assuming that the books five not been closed. Disregard effects of corrections on income tax. (Credit account titles are automaticolly indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry' for the occount titles and enter Ofor the omounts Round answers to 0 decimat ploces, es, 1250)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Frank Woods Business Accounting

Authors: Frank Wood, Alan Sangster

9th Edition

0273655523, 9780273655527

More Books

Students also viewed these Accounting questions

Question

Why is a customer deposit a liability? Give an example.

Answered: 1 week ago

Question

2 What are your current strengths in being an appreciative coach?

Answered: 1 week ago

Question

Aware of the role of HRM in multinational corporations.

Answered: 1 week ago