Question

The reported net incomes for the first 2 years of Shamrock Products, Inc., were as follows:...

The reported net incomes for the first 2 years of Shamrock Products, Inc., were as follows: 2017, $146,400; 2018, $187,600. Early in 2019, the following errors were discovered.

1.

Depreciation of equipment for 2017 was overstated $18,200.

2.

Depreciation of equipment for 2018 was understated $40,600.

3.

December 31, 2017, inventory was understated $49,300.

4.

December 31, 2018, inventory was overstated $16,000.
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Answer #1

Correcting entry necessary when these errors are discovered is

Correcting entry necessary when these errors are discovered is
Accounts titles and Explanation Debit ($) Credit ($)
Retained earnings              38,400
        Inventory         16,000
       Accumulated depreciation(40,600-18,200)         22,400
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