A machine with a 5-year life was purchased on january 1, Ask an Expert

Accounting

Raney Corp's auditor discovered two errors. No errors were corrected during 2010. The errors are described as follows:

(1) Merchandise costing $5,000 was sold to a customer for $9,000 on December 31, 2010, but it was recorded as a sale on January 2, 2011. The merchandise was properly excluded from the 2010 ending inventory. Assume the periodic inventory system is used.

(2) A machine with a 5-year life was purchased on January 1, 2010. The machine cost $20,000 and has no expected salvage value. No depreciation was taken in 2010 or 2011. Assume the straight-line method for depreciation.

Required:

Prepare appropriate journal entries (assume the 2011 books have not been closed). Ignore income taxes.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M955950

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