Reference no: EM132602015

Question 1: Prepare the required Journal entries (if any) to correct PC accounts, assuming each transaction is independent and assume 2019 books are not closed.

You have been assigned to examine the financial statements of PC corp. for the year ended December 31, 2019, as prepared following IFRS. You discover the following situations:

1- Physical inventory count on Dec31, 2017, improperly excluded merchandise costing $13,000 that had been temporarily stored in a public warehouse. PC uses periodic inventory system

2- Physical inventory count on Dec31,2019, improperly included merchandise with a cost of $26,000 that had been recorded as a sale on Dec27, 2019, and was being held for the customer to pick up on Jan 4,2020

3- Depreciation of $6,700 for 2018 on delivery vehicles was not recorded

4- A collection of $4,600 on account from customer received on Dec 31,2019, was not recorded

5- A large piece of equipment was purchased on Jan 1, 2018 for $20,500 and was charged in error to repairs expense. The equipment estimated useful life 8 years and no residual value. PC uses straight-line depreciation method for this type of equipment.

6- On Dec 31, 2017 accrued wages of $1,500 were not recognized

7- An insurance premium paid on July 1, 2018 for policy expires on June 30, 2021, amount of $12,000 was charged to insurance expense. The policy covers 3 years of insurance

8- The Accountant recorded a purchase of supplies for $9,000 in 2017 that applied to 2018.

9- At the beginning of 2019, the company purchased equipment for $225,000 (residual value $22,500) and had useful life 6 years. The accountant used straight line amortization but failed to deduct the residual value in calculation the depreciation.

10- Jan 1, 2018, rented out an office space and received cheque for $44,000 the amount for 4 years rent 2018 to the end of 2021; the entire amount was credited to rental income.