Your firm is conducting an audit of the 2016 financial statements of Help Incorp
ID: 2482265 • Letter: Y
Question
Your firm is conducting an audit of the 2016 financial statements of Help Incorporated and found the following errors. Please identify the journal entries to correct each. Assume that the books for 2016 are still open.
a. Purchased office equipment on January 1, 2015 for $45,000 and debited office supplies. The equipment has a 5-year useful life and no salvage value. The company uses straight-line depreciation.
b. On January 1, 2015, Help Incorporated entered into an agreement lease space to a tenant for five years. Help Inc. received a total payment of $60,000 for the first month’s rent, the last month’s rent and a security deposit, each representing one-third of the total.
c. In June 2015, the Company purchased $25,000 of supplies and recorded them as an expense. At the end of 2015, $15,000 remained. At the end of 2016, the balance of suppliers totaled $3,000.
Explanation / Answer
Date
Account Titles and Explanation
Debit
Credit
a.
December 31 2016
Equipment A/c
$27000
Depreciation ( 2 years)
$18000
Office Supplies
$45000
b.
December 31 2016
Rent Receivable
$40000
Advance rent
$20000
Security Deposit
$20000
c.
December 31 2016
Supplies Expenses
$22000
To Supplies
$22000
Date
Account Titles and Explanation
Debit
Credit
a.
December 31 2016
Equipment A/c
$27000
Depreciation ( 2 years)
$18000
Office Supplies
$45000
b.
December 31 2016
Rent Receivable
$40000
Advance rent
$20000
Security Deposit
$20000
c.
December 31 2016
Supplies Expenses
$22000
To Supplies
$22000
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.