60.1K

Verified Solution

Link Copied!

4. The company has failed to accrue sales commissions payable at the end of each of the last 2 years, as follows.
	December 31, 2011	$ 5,400
	December 31, 2012	$ 4,600

5. In reviewing the December 31, 2011, inventory, the company discovered errors in its inventory-taking procedures that have caused inventories for the last 3 years to be incorrect, as follows. The company has already made an entry that established the incorrect December 31, 2012, inventory amount.
	December 31, 2010	Understated	$ 32,000
	December 31, 2011	Understated	$ 51,000
	December 31, 2012	Overstated	$ 9,500

6. At December 31, 2012, the company decided to change to the straight -line method depreciation method on its retail display equipment from double-declining-balance. The equipment had an original cost of $250000 when purchased on January 1, 2011. It has a salvage value of 0 and an 8-year useful life. Depreciation expense recorded prior to 2012 under the double-declining-balance method was $62500. The company has already recorded 2012 depreciation expense of $46875 using the double-declining-balance method.

7. Before the current year, the company accounted for its income from long-term construction contracts on the completed-contract basis. Early this year, the company changed to the percentage-of-completion basis for accounting purposes but continues to use the completed-contract method for tax purposes. Income for the current year has been recorded using the new method. Prior year tax effects must be considered. The following information is available.
			Pretax Income
			Percentage-of-Completion		Completed-Contract
	Prior to 2012		$320,000		$180,000
	2012		$140,000		$120,000
Required:
Prepare the journal entries necessary at December 31, 2012, to record the corrections and changes made to date related to the information provided. The books are still open for 2012. The income tax rate is 35%. The company has not yet recorded its 2012 income tax expense and payable amounts so current-year tax effects may be ignored.

Answer & Explanation Solved by verified expert

See Answer