Williams Santana, Inc. is a manufacturer of high-tech industrial parts that was started in 2009 by two talented engineers with little business training. In 2021, the company was acquired by one of its major customers As part of an intemal audit, the following facts were discovered. The audit occurred during 2021 before any adjusting entries or closing entries were prepared. The income tax rate is 25% for all years. a. A five year casualty Insurance policy was purchased at the beginning of 2019 for $38,500. The full amount was debited to Insurance expense at the time b. Effective January 1, 2021 , the company changed the salvage value used in calculating depreciation for its office building The building cost $638.000 on December 29, 2010, and has been depreciated on a straight line basis assuming a useful life of 40 years and a salvage value of $110.000. Deciining real estate values in the area indicate that the salvage value will be no more than $27,500 con December 31, 2020, merchandise inventory was overstated by $28.500 due to a mistake in the physical inventory count using the periodic inventory system d. The company changed inventory cost methods to FIFO from LIFO at the end of 2021 for both financial statement and income tax purposes. The change will cause a $995,000 increase in the beginning inventory at January 1 2022 e. At the end of 2020, the company failed to accrue $17100 of sales commissions earned by employees during 2020. The expense was recorded when the commissions were pold in early 2021. 1. At the beginning of 2019, the company purchased a machine at a cost of $790.000, its useful life was estimated to be ten years with no salvage value. The machine has been depreciated by the double declining balance method. Its book value on December 31, 2020 was $505,600. On January 1 2021 the company changed to the straight line method 9. Warranty expense is determined each year as 1% of sales. Actual payment experience of recent years indicates that 0.80% is a better indication of the actual cost. Management effects the change in 2021. Credit sales for 2021 are $4,700,000 in 2020 they were $4.400,000 Required: For each situation 1. Identify whether it represents an accounting change or an error. If an accounting change identify the type of change. For accounting errors, choose "Not applicable 2. Prepare any lournal entry necessary as a direct result of the change or error correction, as well as any adjusting entry for 2021 related to the situation described. Any tax effects should be adjusted for through income tax payable or Refund-Income tax Record entry necessary as a direct result of the change or error correction Note: Enter debits before credits General Journal Debit Credit Transaction a(1) Prepaid insurance (Retained oamings Record entry Clear entry View general journal Journal entry worksheet Record entry necessary as a direct result of the change or error correction Note: Enter debits before credits Transaction General Journal Debit Credit (1) Record entry Clear entry View general journal Journal entry worksheet Record adjusting journal entry for 2021 Note: Enter debits before credits Transaction General Journal Debit Credit 0(2) Record adjusting journal entry for 2021. Note: Enter debits before credits. General Journal Debit Credit Transaction d(2) Record entry Clear entry View general journal 4 .. 5 6 7 09 9 14 Record entry necessary as a direct result of the change or error correction. Note: Enter debits before credits General Journal Debit Credit Transaction e(1) Record entry Clear entry View general journal 5 67 8 9 10 14 > Record adjusting journal entry for 2021. Note: Enter debits before credits General Journal Debit Credit Transaction e(2) Record entry Clear entry View general journal Journal entry worksheet . Record entry necessary as a direct result of the change or error correction Note: Enter debits before credits Transaction General Journal Debit Credit f(1) Record entry Clear entry View general Journal 7 8 9 10 11 12 . 14 Record adjusting journal entry for 2021. Note: Enter debits before credits. General Journal Debit Credit Transaction 1(2) Record entry Clear entry View general Journal Journal entry worksheet 7 8 9 10 11 12 13 14 > Record entry necessary as a direct result of the change or error correction. Note: Enter debits before credits General Journal Debit Credit Transaction 9(1) Record entry Clear entry View general Journal 7 8 9 10 11 12 13 14 > Record adjusting journal entry for 2021. Note: Enter debits before credits General Journal Debit Credit Transaction 9(2) Record entry Clear entry View general journal