Section B:Error Analysis Prepare the journal entry to correct the following that

Question

Section B:Error Analysis Prepare the journal entry to correct the following that the Albany State Company (ASC discovered at December 31, 2017. Assume that the books are still open. 1. ASC did not record depreciation of $50,000 for the year 2015 on factory equipment. 2. ASC received $40,000 on January 1,2017 for the rent of a building for both 2017 and 2018·The entire amount was credited to rental income on January 1, 2017. ASC did not record accrued wages in the amount of $15,000 on December 31, 2016 3. On January 1, 2017, ASC paid $12,000 for a three-year insurance policy. The entire amount was debited to insurance expense on January 1, 2017. 4. 5. ASC discovered that the ending inventory in 2015 was overstated by $25,000.

Explanation / Answer

2017
December 31
1     Prior Period Expense / Depreciation A/c Dr. $50,000
To Factory Equipment A/c $50,000

2 Rental Income A/c Dr. $20,000
To Unearned Income A/c $20,000

3 Wages A/c Dr. $15,000
To Outstanding Wages A/c $15,000

4 Prepaid Insurance A/c Dr. $8,000
To Prepaid Expense A/c $8,000

5 Trading A/c Dr. $25,000
To Closing Stock A/c $25,000

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