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. |
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2. |
Depreciation of equipment for 2018 was understated $40,600. |
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3. |
December 31, 2017, inventory was understated $49,300. |
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4. |
December 31, 2018, inventory was overstated $16,000. |
Correcting entry necessary when these errors are discovered is
Correcting entry necessary when these errors are discovered is | |||
Accounts titles and Explanation | Debit ($) | Credit ($) | |
Retained earnings | 38,400 | ||
Inventory | 16,000 | ||
Accumulated depreciation(40,600-18,200) | 22,400 |
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