Your answer is partially correct.

The first audit of the books of Sage Company was made for the year ended December $31,2026.$ In examining the books, the auditor

found that certain items had been overlooked or incorrectly handled in the last $3$ years. These items are:

At the beginning of $2024,$ the company purchased a machine for $$549,000($salvage value of $$54,900)$ that had a useful life of

$6$ years. The bookkeeper used straight$-$line depreciation but failed to deduct the salvage value in computing the depreciation

base for the $3$ years.

At the end of $2025,$ the company failed to accrue sales salaries of $$48,000.$

A tax lawsuit that involved the year $2024$ was settled late in $2026.$ It was determined that the company owed an additional

$$91,000$ in taxes related to $2024.$ The company did not record a liability in $2024$ or $2025$ because the possibility of loss was

considered remote, and charged the $$91,000$ to a loss account in $2026.$

Sage Company purchased a copyright from another company early in $2024$ for $$52,000.$ Sage had not amortized the copyright

because its value had not diminished. The copyright has a useful life at purchase of $20$ years.

In $2026,$ the company wrote off $$88,000$ of inventory considered to be obsolete; this loss was charged directly to Retained

Earnings.

Prepare the journal entries necessary in $2026$ to correct the books, assuming that the books have not been closed. Disregard effects of

corrections on income tax. $($Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is

required, select $"$No Entry" for the account titles and enter O for the amounts. Round answers to O decimal places, e$.$g$,1250.$ List all debit entries

before credit entries.$)$

No$.$ Account Titles and Explanation

Debit

Credit

Accumulated Depreciation$-$Machinery

Depreciation Expense

Retained Earnings

Retained Earnings

Salaries and Wages Expense

No Entry

No Entry

Amortization Expense

Retained Earnings

Copyrights

Loss Due to Write off of Inventory

Retained Earnings

eTextbook and Media

List of Accounts