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Woods, Inc. purchased a new engine for a long-distance truck in January, 2015. The engine cost $200,000 and should give the truck an additional 400,000
Woods, Inc. purchased a new engine for a long-distance truck in January, 2015. The engine cost $200,000 and should give the truck an additional 400,000 miles of life. Inadvertently, the engine was charged to truck repairs expense. The error was found in December, 2016. The company records depreciation based on miles driven with no salvage value. Miles driven in 2015 were 80,000 and 70,000 in 2016. Which one of the following entries properly corrects all the errors thru December 31, 2016? (Ignore income taxes.)
Account Debit Credit Engine 200,000 Accumulated Depreciation 35,000 Retained Earnings-Prior Period Adj. 165,000 |
Account Debit Credit Retained Earnings-Prior Period Adj. 160,000 Depreciation Expense 40,000 Engine 200,000 |
Account Debit Credit Engine 200,000 Depreciation Expense (2015) 40,000 Retained Earnings-Prior Period Adj. 240,000 |
Account Debit Credit Engine 200,000 Depreciation Expense (2016) 35,000 Accumulated Depreciation 75,000 Retained Earnings-Prior Period Adj. 160,000 |
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