You have been assigned to examine
the financial statements of PC corp. for the year ended December
31, 2019, as prepared following IFRS. You discover the following
situations:
- Physical inventory count on Dec31, 2018, improperly excluded
merchandise costing $13,000 that had been temporarily stored in a
public warehouse. PC uses periodic inventory system
- Physical inventory count on Dec31,2019, improperly included
merchandise with a cost of $26,000 that had been recorded as a sale
on Dec27, 2019, and was being held for the customer to pick up on
Jan 4,2020
- Depreciation of $6,700 for 2018 on delivery vehicles was not
recorded
- A collection of $4,600 on account from customer received on Dec
31,2019, was not recorded until Jan 2, 2020
- A large piece of equipment was purchased on Jan 1, 2019 for
$20,500 and was charged in error to repairs expense. The equipment
estimated useful life 8 years and no residual value. PC uses
straight-line depreciation method for this type of equipment.
- On Dec 31, 2018 accrued wages of $1,500 were not recognized and
not recorded
- A 3 years insurance premium paid on July 1,2018 for policy
expires on June 30,2021, amount of $12,000 was charged to insurance
expense
- The Accountant recorded a purchase of supplies for $9,000 in
2019 that applied to 2020.
- At the beginning of 2017, the company purchased equipment for
$225,000(residual value $22,500) and had useful life 6 years. The
accountant used straight line amortization, but failed to deduct
the residual value in calculation the depreciation base for the
past and current years.
- A cheque for $44,000 was paid in January 1, 2019 to cover the
rent for 2019 and 2020; the entire amount was debited to rental
expense.
Instructions:
Prepare the required Journal entries
(if any) to correct PC accounts, assuming each transaction is
independent and assume 2019 books are not
closed.