Professional Documents
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Chapter 22 Homework
Chapter 22 Homework
ENDED DECEMBER 31
2011
4,000
940
1,000
2,060
$
$
$
$
2012
4,000
1,100
1,000
1,900
APPLICATION
2011
2,200
20
2,180
2,060
4,240
year
sales revenue
cost of goods sold
operating expenses
$
net income
FIFO
2010
2011
2012
O TO FIFO
O TO FIFO
ACCOUNTING CHANGE
COMPUTATION OF ADJUSTED RETAINED EARNINGS
year
retained earnings, January 1, as reported under FIFO
less:
cumulative effect of change in accounting principle to average cost
sum of prior years net income under new method
less: sum of prior years net income under previous method
retained earnings, January 1, as adjusted
year
retained earnings, January 1, as reported under FIFO
less:
cumulative effect of change in accounting principle to average cost
sum of prior years net income under new method
less: sum of prior years net income under previous method
retained earnings, January 1, as adjusted
year
retained earnings, January 1, as reported under FIFO
less:
cumulative effect of change in accounting principle to average cost
sum of prior years net income under new method
less: sum of prior years net income under previous method
retained earnings, January 1, as adjusted
s method
s method
s method
2010
160,000
157000
170000 $
$
(13,000)
147,000
590,000
660000
680000 $
$
(20,000)
570,000
2013
2014
780,000
970000
985000 $
$
(15,000)
765,000
2010
$
$
2013
$
$
2014
$
$
$
$
$
465,000
(360,000)
105,000
book value
less:
salvage value
dpreciable cost
$
$
$
105,000
15,000
90,000
depreciable cost
divided by:
remaining service life
depreciation for 2012
$
$
90,000
2
45,000
journal entry
depreciation expense
accumulated depreciation equipment
cost of equipment
less: depreciation to date
book value (december 31, 2011)
$
$
$
780,000
(78,000)
702,000
book value
less: salvage value
dpreciable cost
$
$
$
702,000
702,000
depreciable cost
divided by:
remaining service life
service life
40
less:
depreciation for 2012
years to date
journal entry
depreciation expense
accumulated depreciation
$
$
$
book value
less: current salvage value
dpreciable cost
depreciable cost
divided by:
current service life
less: prior years
depreciation for 2012
journal entry
depreciation expense
accumulated depreciation equipment
cost of equipment
less: depreciation to date
book value (december 31, 2011)
#DIV/0!
#DIV/0!
book value
less: current salvage value
dpreciable cost
depreciable cost
divided by:
remaining service life
current service life
less:
years to date
depreciation for 2012
journal entry
depreciation expense
accumulated depreciation
#DIV/0!
#DIV/0!
ATION
$
$
$
450,000 $
450,000 $
450,000 $
$
45,000
$
150,000
120,000
90,000
360,000
702,000
37
45,000
37
$
18,973
18,973
$
18,973
$
$
$
$
0
#DIV/0!
#DIV/0!
#DIV/0!
$
$
$
$
$
$
#DIV/0!
0
#DIV/0!
#DIV/0!
#DIV/0!
1,2012
$
440,000
$
$
216,000
224,000
32,000
PRECIATION
OR 2010
72,000
STRAIGHT-LINE METHOD
32,000
OR 2010
#DIV/0!
STRAIGHT-LINE METHOD
#DIV/0!
$
$
10,200
20,400
PART 2
JOURNAL ENTRY TORECORD ERROR CORRECTION (FAILURE TO ACCRUE SALES SALARIES of
retained earnings
$
45,000
salaries and wages expense
$
45,000
PART 4
COMPUTATION OF AMORTIZATION EXPENSE
cost of asset
$
50,000
divided by: service life
20
amortization expense
$
2,500
COMPUTATION OF ADJUSTMENT NEEDED TO CORRECT ERROR FOR PRIOR YEARS
# of prior years
2
adjusment amount
$
5,000
$
$
2,500
5,000
$
7,500
PART 5
JOURNAL ENTRY TORECORD ERROR CORRECTION (BYPASSED THE INCOME STATEMENT IN E
loss due to market decline of inventories (or cost of goods sold)
$ 87,000
retained earnings
PART1
COMPUTATION OF DEPRECIATION CHARGED IN ERROR
cost of equipment
less: salvage value
$
depreciation base
divided by: service life
#DIV/0!
depreciation expense
COMPUTATION OF CORRECT AMOUNT FOR DEPRECIATION
cost of equipment
less: salvage value
$
depreciation base
divided by: service life
#DIV/0!
depreciation expense
COMPUTATION OF ADJUSTMENT NEEDED TO CORRECT ERROR FOR PRIOR YEARS
# of prior years
#DIV/0!
depreciation taken
#DIV/0!
depreciation (correction)
#DIV/0!
adjustment amount
COMPUTATION OF ADJUSTMENT NEEDED TO CORRECT ERROR FOR CURRENT YEAR
#DIV/0!
depreciation taken
#DIV/0!
depreciation (correction)
#DIV/0!
adjustment amount
#DIV/0!
#DIV/0!
#DIV/0!
PART 2
JOURNAL ENTRY TORECORD ERROR CORRECTION (FAILURE TO ACCRUE SALES SALARIES of
retained earnings
salaries and wages expense
PART 4
COMPUTATION OF AMORTIZATION EXPENSE
cost of asset
divided by: service life
#DIV/0!
amortization expense
COMPUTATION OF ADJUSTMENT NEEDED TO CORRECT ERROR FOR PRIOR YEARS
# of prior years
#DIV/0!
adjusment amount
COMPUTATION OF ADJUSTMENT NEEDED TO CORRECT ERROR FOR CURRENT YEAR
#DIV/0!
adjusment amount
JOURNAL ENTRY TO RECORD ERROR CORRECTION
amortization expense 2012
retained earnings (expense for 2010 & 2011)
copyright
#DIV/0!
#DIV/0!
#DIV/0!
PART 5
JOURNAL ENTRY TORECORD ERROR CORRECTION (BYPASSED THE INCOME STATEMENT IN E
loss due to market decline of inventories (or cost of goods sold)
retained earnings
OR YEARS
RENT YEAR
OR YEARS
RENT YEAR
OR YEARS
RENT YEAR
OR YEARS
RENT YEAR
ERROR ANALYSIS
PREPARATION OF A SCHEDULE SHOWING THE DETERMIN
PART 1
SALES ERRONEOUSLY INCLUDED IN PRIOR YEAR INCOME
corrections:
sales erroneously included in 2012 income
PART 2
UNDERSTATEMENT OF PRIOR YEAR ENDING INVENTORY
corrections:
understatement of 2012 ending inventory
PART 3
COMPUTATION OF BOND INTEREST EXPENSE
book value of
stated
effective
effective
bonds
interest
interest rate
interest
2012 $
240,000 $
15,000
7% $
16,800
2013 $
241,800 $
15,000
7% $
16,926
ADJUSTMENT TO BOND INTEREST EXPENSE
corrections:
adjustment to bond interest expense
PART 4
REPAIRS ERRONEOUSLY CHARGED TO THE EQUIPMENT ACCOUNT
corrections:
repairs erroneously charged to the equipment account
COMPUTATION OF ERRONEOUS DEPRECIATION TAKEN IN PRIOR YEARS
depreciation
total excess
rate
additions
depreciation
depreciation
2012
10% $
8,000 $
800 $
800
2013
10% $
9,400 $
940 $
1,740
REPAIRS ERRONEOUSLY CHARGED TO THE EQUIPMENT ACCOUNT
corrections:
depreciation recored on improperly captialized repairs
PART 1-4
corrections:
depreciation recored on improperly captialized repairs
PART 1-4
2012
(38,200) $
2013
38,200
2012
8,640 $
2013
(8,640)
2012
(1,800) $
2013
(1,926)
2012
(8,000) $
2013
(9,400)
2012
800 $
2013
1,740
difference
$
(1,800)
$
(1,926)
2013
101,000
77,400
$
$
$
$
$
$
(38,200)
8,640
(1,800)
(8,000)
800
62,440
$
$
$
$
$
$
38,200
(8,640)
(1,926)
(9,400)
1,740
97,374
2012
2013
2012
2013
difference
$
$
2012
2012
2013
2013
2012
2013
$
$
$
$
$
$
2013
$
$
$
$
$
$
ORE TAXES