On 7/1/20, Cenwein Corp. recorded the purchase of manufacturing equipment as follows: Equipment Expense &n
On 7/1/20, Cenwein Corp. recorded the purchase of manufacturing equipment as follows:
Equipment Expense $850,000
Cash $850,000
Cenwein anticipates using the equipment for 8 years and a residual value of $26,000 at the end of that time.
- If the company does not make any correcting or adjusting entries during 2020 or 2021, determine the direction and magnitude of the error under US GAAP accrual accounting standards for assets, liabilities, and net income and equity.
|
Asse Assets 12/31/20 |
Liabilities 12/31/20 |
Net Income 2020 |
Equity 12/31/20 |
|
Asset Assets 12/31/21 |
Liabilities 12/31/21 |
Net Income 2021 |
Equity 12/31/21 |
Homework Answers
Answer:
| Assets 12/31/20 | Liabilities 12/31/20 | Net Income 2020 | Equity 31/12/20 |
| $7,47,000 | 0 | -$1,03,000 | 0 |
| Assets 12/31/21 | Liabilities 12/31/21 | Net income 2021 | Equity 12/31/21 |
| $6,44,000 | 0 | -$1,03,000 | 0 |
Assets 12/31/20 = $850000-$103000 =$7,47,000/-
Assets 12/31/21 =$747000-103000 =$6,44,000/-
Dep. = 850000-26000/8
= $103,000/-
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On 7/1/20, Cenwein Corp. recorded the purchase of manufacturing
equipment as follows:
Equipment
Expense &n
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please show work.
2. In 2019, the bookkeeper for a company mistakenly recorded an entry for a two-year contract as cash basis rather than accrual basis and made no adjustment at year-end. The mistake was not caught and resulted in the following errors: Assets 12/31/19 NE Assets 12/31/20 NE Assets 12/31/21 NE Liabilities 12/31/19 NI 2019 Equity 12/31/19 Understated - $765,000 Overstated - $765,000 Overstated - $765,000 Liabilities 12/31/20 NI 2020 Equity 12/31/20 Understated - $225,000 Understated - $540,000 Overstated...
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