Prepare journal entries to correct the errors

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At the end of 2011, while auditing the books of the Sandlin Company, before the books have been closed, you find the following items:a. A building with a 30-year life (no residual value, straight-line depreciation) was purchased on January 1, 2011 by issuing a $90,000 non-interest-bearing, four year note. The entry made to record the purchase was a debit to Building and a credit to Notes Payable for $90,000; 12% is a fair rate of interest on the note.b. The inventory at the end of 2011 was found to be overstated by $15,000. At the same time, it was discovered that the inventory at the end of 2010 had been overstated by $35,000. The company uses the perpetual inventory system.c. For the last three years, the company has failed to accrue salaries and wages. The correct amounts at the end of each year were: 2009'$12,000; 2010'$18,000; 2011'$10,000.
Required:
1. Prepare journal entries to correct the errors (ignore income taxes).

2. Assume, instead, that the company discovered the errors after it had closed the books. Prepare journal entries to correct the errors (ignore income taxes).

Reference no: EM13866369

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