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Please answer a,b,c! a. Quigley Down Under Co. bought a machine on January 1, 2017 for...

Please answer a,b,c!

a. Quigley Down Under Co. bought a machine on January 1, 2017 for $1,400,000. The machine had an estimated residual value of $120,000 and a ten-year life. “Machine expense” was debited on the purchase date for $1,400,000. Quigley uses straight-line depreciation for all assets. The error was discovered on June 15, 2018 after the books had been closed for 2017.

What journal entry (if any) should Quigley record on 6/15/18 related to this error? (ignore taxes)

6/15/18

True or false (circle one): Quigley should restate its income statements and balance sheets for all prior years affected by the error and reported in the 2018 annual report.

TRUE                                               FALSE

b. On October 1, 2017 Arrival Co. received $60,000 in advance for services the company would perform for its customers evenly over the next 12 months (beginning 10/1/17). That day, Arrival debited cash and credited revenue for $60,000, and no other entries were recorded related to this transaction. The error was not discovered until February 1, 2018 after the books had been closed for 2017. Arrival’s marginal tax rate is 30%.

What journal entry (if any) should Arrival record on 2/1/18 related to this error?

2/1/18

True or false (circle one): Arrival should restate its income statements and balance sheets for all prior years affected by this error and reported in the 2018 annual report.

TRUE                                               FALSE

c. On December 1, 2016 Breaking Good, Inc. paid $20,000 in advance for insurance services beginning 12/1/16 and lasting for 12 months. On that date, Breaking Good debited insurance expense for the full amount. This error is discovered on May 20, 2018 (after the books for 2017 were closed).

What journal entry (if any) should Breaking Good record on 5/20/18 related to this error? (ignore taxes)

5/20/18

True or false (circle one): Breaking Good should restate its income statements and balance sheets for all prior years affected by this error and reported in the 2018 annual report.

TRUE                                               FALSE

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