Reference no: EM132997996

Question - Brayden Inc. is manufacturer of high-tech industrial parts that was started in 2019 by two talented engineers with little business training. As part of an internal audit, the following facts were discovered. The audit occurred during 2021 before any adjusting entries or closing entries were prepared.

A) A five-year casualty insurance policy was purchased at the beginning of 2019for P35,000. The full amount was debited to insurance expense at the time.

B) On December 31, 2020, merchandise inventory was overstated by P25,000 due to a mistake in the physical inventory count using the periodic inventory system.

C) At the end of 2020, the company failed to accrue P15,500 of sales commissions earned by employees during 2020. The expense was recorded when the commissions were paid in the early 2021.

D) Bad debts expense is determined each year as 1% of credit sales. Actual collection experience of recent years indicates that 0.75% is a better indication of uncollectible accounts. Management effects the the change in 2021. Credit sales for 2021 are P4,000,000; in 2020 they were P3,700,000.

E) Additional industrial robots were acquired at the beginning of 2019 and added the company's assembly process. The P100,000 cost of the equipment was inadvertently recorded as repairs expense. Robots have 10-year useful lives and no material salvage value. The class of equipment is depreciated by the straight-line method.

Required - Based in the above information, answer the following:

1) What the entry to correct the error described in item a should be.

2) What the entry to correct the error described in item b should be.

3) What the entry to correct the error described in item c should be.

4) What the entry to correct the error described in item d should be.