Conrad Playground Supply underwent a restructuring in 2013. The company conducte
ID: 2720054 • Letter: C
Question
Conrad Playground Supply underwent a restructuring in 2013. The company conducted a thorough internal audit, during which the following facts were discovered. The audit occurred during 2013 before any adjusting entries or closing entries are prepared.
Additional computers were acquired at the beginning of 2011 and added to the company’s office network. The $42,000 cost of the computers was inadvertently recorded as maintenance expense. Computers have five-year useful lives and no material salvage value. This class of equipment is depreciated by the straight-line method.
Two weeks prior to the audit, the company paid $14,000 for assembly tools and recorded the expenditure as office supplies. The error was discovered a week later.
On December 31, 2012, merchandise inventory was understated by $72,000 due to a mistake in the physical inventory count. The company uses the periodic inventory system.
At the end of 2012, the company failed to accrue $92,000 of interest expense that accrued during the last four months of 2012 on bonds payable. The bonds, which were issued at face value, mature in 2017. The following entry was recorded on March 1, 2013, when the semiannual interest was paid
Interest expense138,000
Cash 138,000
A three-year liability insurance policy was purchased at the beginning of 2012 for $70,200. The full premium was debited to insurance expense at the time.
For each error, prepare any journal entry necessary to correct the error as well as any year-end adjusting entry for 2013 related to the situation described. (Ignore income taxes.) (If no entry is required for a particular transaction, select "No journal entry required" in the first account field.)
Record entry necessary for error correction.
(1 to 12 jornal entries)
Conrad Playground Supply underwent a restructuring in 2013. The company conducted a thorough internal audit, during which the following facts were discovered. The audit occurred during 2013 before any adjusting entries or closing entries are prepared.
Explanation / Answer
a. Computers account debit 42,000 Maintenance account credit 42,000
Depreciation account debit 25,200 Accumulated depreciation credit 25,200
b. Assembly tools account debit 14,000 Office supplies credit 14000
c.Opening inventory account debit 72,000 Retained earnings account credit 72,000
d.No journal entry required.
e. Interest expense account debit 138,000 Interest payable account credit 138,000
f. Prepaid insurance account debit 23,400 Insurance expense account credit 23,400
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.