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In 2018, the internal auditors of KJI Manufacturing discovered the following material errors made in...

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Accounting

In 2018, the internal auditors of KJI Manufacturing discovered the following material errors made in prior years:

  1. Equipment was purchased on June 30, 2016, for $185,000. The purchase was incorrectly recorded as a debit to repair and maintenance expense. The equipment has a useful life of five years and no residual value.
  2. On March 31, 2017, $36,000 was paid to a contractor to landscape the area around a manufacturing plant including the installation of a sprinkler system. The expenditure was debited to the Land account. The landscaping is expected to have a 20-year useful life and no residual value.

KJI uses the straight-line method of depreciation for all depreciable assets. Required: 1. Prepare the journal entries at December 31, 2018, to correct the errors (ignore income taxes). Entry 1: Record the entry to correct error in recording equipment. Entry 2: Record the entry to correct error in recording land improvements.

2. Prepare the journal entries to record 2018 depreciation for any assets recorded in requirement 1. Entry: Record the entry for the depreciation of the assets in Requirement 1 for 2018.

NOTE: There should only be 3 journal entries. Two entries for requirement 1 and one for requirement 2.

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