Williams-Santana, Inc., is a manufacturer of high-tech
industrial parts that was started in 2009 by two talented engineers
with little business training. In 2021, the company was acquired by
one of its major customers. As part of an internal audit, the
following facts were discovered. The audit occurred during 2021
before any adjusting entries or closing entries were prepared. The
income tax rate is 25% for all years.
Required:
For each situation:
1. Identify whether it represents an accounting
change or an error. If an accounting change, identify the type of
change. For accounting errors, choose "Not applicable".
2. Prepare any journal entry necessary as a direct
result of the change or error correction, as well as any adjusting
entry for 2021 related to the situation described. Any tax effects
should be adjusted for through Income tax payable or Refund—income
tax.
a. Not applicable. Its an Error in Accouting
b. Change in accouting Policies.
C.Its an error. The inventory values can be reversed in the Current Year.
d. Change in accounting Policies
e. Its an error.
f. Change in accounting Polices
g. Change in apportionment of expenses. It tottaly Dependent on the Management.
The effect of such changes shall be apportioned respectively.
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