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In 2017, the new CEO of Watsontown Electric Supply became concerned about the company's apparently position. Wishing to make certain that the grim monthly reports he was receiving from the bookkeeper were accurate, the s financial records. The CPA firm discovered the following facts during the course of prior to any adjusting or closing entries being for 2017 t. A new digi ital imaging system was acquired on January 5, 2016, at a cost of $5,000. Although this asset was expected to be in use for the next four years, the purchase was inadvertently charged to office expense. Per the company's accounting manual, office equipment of this type should be depreciated using the straight-line A used truck, purchased on November 18, 2017, was recorded with this entry with no salvage value assumed 2. To record truck expenditure: DR Vehicle $ 18,000 Management plans to use this truck for three years and then trade it in on a new one. Salvage is has always used straight-line depreciation for fixed assets estimated at $3,000. Watsontown recording a half-year of depreciation in the year the asset is acquired July 1, 2017, the company rented a warehouse for three years. The lease agreement specified that each year's rent be paid in advance, so a check for the first year's rent of $18,000 was issued and recorded as an addition to the Buildings account. 4. Late in 2016, Watsontown collected $23,500 from a customer in full payment of his account. The cash receipt was credited to s bookkeeper was reviewing outstanding receivables and noticed the outstanding balance. Knowing revenue. In 2017, Watsontown's the customer in question had recently died, she wrote off the account. Because Watsontown seldom has bad debts, the uses the direct write-off method whereby it charges Bad debts expense and credits Accounts receivable when an account is deemed uncollectible. as an insurance expense at the time. $8,000 on the anniversary date of the loan. The first interest payment was made on October 1, 2017, and expensed in its entirety 5. A three-year property and casualty insurance policy was purchased in January 2016 for $30,000. The entire amount was recorded 6. On October 1, 2016, Watsontown borrowed $100,000 from a local bank. The loan terms specified annual interest payments of Required: Prenare anv iournal entry necessarv to correct each error as well as anv vear-end adiusting entry for 2017 related to the descriherd as an insurance expense at the time. 6. On October 1, 2016, Watsontown borrowed $100,000 from a local bank. The loa n terms specified annual interest payments of $8,000 on the anniversary date of the loan. The first interest payment was made on October 1, 2017, and expensed in its ent Required: Prepare any journal entry necessary to correct each error as well as any year-end adjusting entry for 2017 related to the described situation. Ignore income tax effects. (If no entry is required for account field.) a particular transaction, select "No journal entry required" in the first Journal entry worksheet 2 3 Prepare the entry to capitalize the Debit Record entry
