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You have been asked to examine the financial records of Cardinal Company for the year ended December 3 1 , 2 0 2 3 ,
You have been asked to examine the financial records of Cardinal Company for the year ended December because their bookkeeper, a GVSU graduate, may have made several mistakes over the years. Please record the correcting journal entries for the following errors and show any supporting computationswork Prepare the correcting entry or entries below, and you may use the supporting journals on the following page for your analysis, if you wish.
On January Cardinal Company purchased a new forklift for $ paying cash. The bookkeeper recorded this as an expense, and subsequently also did not record any depreciation. In effect, after recording the initial acquisition as an expense, the bookkeeper did nothing regarding the forklift. The forklift should have been capitalized, given an year life, $zero salvage value, and depreciated using the straightline approach.
At the end of Cardinal provided services to a client for which Laker would be paid until the engagement was finished. Cardinal charges $ an hour for their services, and as of December they had worked hours on the project $ On January they completed the project, working a total of hours $ The client paid the entire $ on January Here is the problem, Cardinals bookkeeper did not accrue the service revenue at the end of and instead recorded the entire revenue when the cash payment was received on January
On December Cardinal sold equipment for $ cash. The equipment originally cost $ and $ depreciation had correctly been recorded. The bookkeeper debited cash and credited revenue.
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