What amount should tack report as a prior period adjustment

Reference no: EM13481717

Tack reported a Retained Earnings balance of $150,000 at Dec 312007.In June 2008, Tack's internal audit staff discovered 2errors that were made in preparing the 2007 financial statementsthat are considered material:

a. Merchandisecosting $40,000 was mistakenly omitted from the 2007 endinginventory

b. Equipmentpurchased on July 1 2007 for $70,000 was mistakenly charged to arepairs expense account. The equipment should have been capitalized & depreciated using the straight line depreciation, a 10 yearuseful life, and $10,000 salvage value.

1. What amount shouldTack report as a prior period adjustment to beginning RetainedEarnings at Jan 1 2008 (Ignore tax)

2. Give the journalentries that Tack would make in June 2008 to correct the errorsmade in 2007. Assume that depreciation for 2008 is made as a yearend adjusting entry.

Reference no: EM13481717

Questions Cloud

What tentative conclusions can you draw about the debt : select one of the following companies southwest airlines delta airlines united airlines airtran continental

Ramirez corporation sells two types of computer chips the : ramirez corporation sells two types of computer chips. the sales mix is 30 q-chip and 70 q-chip plus. q-chip has

At the end of december the company found that it had : a company adds overhead costs to jobs at the rate of 8 per direct labor hour. it accumulates overhead costs in a

Crumb cookie companys charter allows it to sell : crumb cookie companys charter allows it to sell 250000shares of 2 par value common stock. to date the firm has sold

What amount should tack report as a prior period adjustment : tack reported a retained earnings balance of 150000 at dec 312007.in june 2008 tacks internal audit staff discovered

Raleigh sold 1000 units at 500 each and earned net income : raleigh sold 1000 units at 500 each and earned net income of 50000. variable expenses were 300 per unit and fixed

A classmate is considering dropping his or her accounting : a classmate is considering dropping his or her accounting class because he or she cannot understand the rules of debits

Watch corporation of switzerland claims that its watches on : watch corporation of switzerland claims that its watches on average will neither gain nor lose time during a week. a

Assume that wilton increases the selling price of hammers : wilton co. reported the following results from the sale of 5000 hammers in may sales 200000 variable costs 120000 fixed

User Account

All Pages