90.2K

Verified Solution

Link Copied!

image

4. 25 pts Bonn Company has made some accounting errors, all discovered before the books were closed in 2020. The correction for each is required, but I included a recommended worksheet to solve. a. A machine was purchased for $50,000 with cash in January 2019. It was charged to Repair Expense. The machine has a five year life and a salvage value of $10,000. Bonn uses straight line depreciation. No depreciation has been recorded in 2020. What they did in 2019 and 2020 What they should have done 2019 Correction in 2020 b. A check was received for $21,000 for three years of rent beginning January 1, 2019. The entire amount was charged to Rent Revenue. The check was received January 3, 2019. What they did in 2019 and 2020 What they should have done 2019 and 2020 Correction in 2020 c. On December 31, 2019, Bonn failed to accrue $15,000 of salaries. On January 2, 2020, they paid the salaries and charged them to salaries expense. What they did in 2019 and 2020 What they should have done 2019 and 2020 Correction in 2020 d. Bonn had sales on account in 2019 resulting in accounts receivable never to be collected of $12,000. In 2019, they wrote of to bad debt expense and accounts receivable $5,000. They did the same in 2020 for $3,000. What they did in 2019 and 2020 What they should have done 2019 and 2020 Correction in 2020 e. Inventory purchased for $16,000 in 2019 was correctly recorded as a purchase of inventory and later charged to Cost of Goods Sold but was omitted from the ending inventory count as it was out on consignment and forgotten. The error was discovered early in 2020 when it was sold and charged to cost of goods sold and inventory. Hint: Prepare a partial periodic inventory calculation for the two years. What they did in 2019 What they should have done 2019 Correction in 2020

Answer & Explanation Solved by verified expert

See Answer