Kriveloff Company is in the processof closing its books at the end of 2017....

50.1K

Verified Solution

Question

Accounting

Kriveloff Company is in the processof closing its books at the end of 2017. The company's preliminaryincome statement for 2017 and its reported income statement for2016 are given below.
                                                                             2017                             2016
                        SalesRevenues                       $900,000                    $880,000
                        Costof GoodsSold                    (450,000)                     (425,000)
                        GrossProfit                                 450,000                       455,000
                        Depreciation                               (115,000)                     (115,000)
                        OtherExpenses                          (108,000)                     (102,000)
                              NetIncome                         $227,000                    $238,000
        Kriveloff's recordsreveal the following information:
(1)  Kriveloff failed toaccrue $7,000 of supplies expense at the end of2016.  The supplies expense was recorded as paid in2017.
(2)  On 1/1/15, Kriveloffpurchased a machine for $120,000.  Although the machinewas expected to have a five-year life, it was erroneously expensedin recording the purchase.  The appropriate depreciationmethod for this machine is double-declining-balance with noresidual.
(3)  At the end of 2017,Kriveloff decided to change its inventory costing method fromaverage cost to the FIFO method.  An analysis of theaccounting records provides the following cost of goods soldamounts under average cost and FIFO:
                                    Year                     FIFO            Average
                                    2015                410,000           430,000
                                    2016                420,000           425,000
                                    2017                432,000           450,000
(4) Kriveloff acquired a truck on1/3/15 for $75,000 and estimated its useful life to be 6 years witha salvage value of $15,000. In 2017, after the preliminarystatements were prepared, Kriveloff realized that the truck couldbe used for an additional 5 years, but that the salvage value atthe end of that time would probably be only $10,000. Straight-linedepreciation is being used.
        Required:
        A.    Preparethe necessary journal entries at December 31, 2017, to record theabove information.
B. Prepare new comparative income statements to reflect theadjustments required by items (1)-(3) above.  You mayignore income taxes.
        C.    Retainedearnings reported for the end of 2016 was $2,333,000 and at the endof 2015 was $2,195,000.  Dividends of $100,000 have beendeclared in each year.  Prepare comparative statements ofretained earnings for Kriveloff Company, reflecting appropriateadjustments from items (1)-(3) above, ignoring income taxes.
Show all work including formulas

Answer & Explanation Solved by verified expert

4.5 Ratings (817 Votes)

2017 2016 Sales revenue 900000 880000 Cost of Goods Sold 450000 425000 Gross Profit 450000 455000 Depreciation 115000 115000 Other expenses 108000 102000 Net Income 227000 238000 2016 Supplies Expense 7000 To Supply Expense payable 7000 Being recording accrued expense in 2016 2017 Supply Expense See Answer

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:

Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!

Become a Member

Transcribed Image Text

In: AccountingKriveloff Company is in the processof closing its books at the end of 2017. The...Kriveloff Company is in the processof closing its books at the end of 2017. The company's preliminaryincome statement for 2017 and its reported income statement for2016 are given below. 2017 2016 SalesRevenues $900,000 $880,000 Costof GoodsSold (450,000) (425,000) GrossProfit 450,000 455,000 Depreciation (115,000) (115,000) OtherExpenses (108,000) (102,000) NetIncome $227,000 $238,000 Kriveloff's recordsreveal the following information:(1) Kriveloff failed toaccrue $7,000 of supplies expense at the end of2016. The supplies expense was recorded as paid in2017.(2) On 1/1/15, Kriveloffpurchased a machine for $120,000. Although the machinewas expected to have a five-year life, it was erroneously expensedin recording the purchase. The appropriate depreciationmethod for this machine is double-declining-balance with noresidual.(3) At the end of 2017,Kriveloff decided to change its inventory costing method fromaverage cost to the FIFO method. An analysis of theaccounting records provides the following cost of goods soldamounts under average cost and FIFO: Year FIFO Average 2015 410,000 430,000 2016 420,000 425,000 2017 432,000 450,000(4) Kriveloff acquired a truck on1/3/15 for $75,000 and estimated its useful life to be 6 years witha salvage value of $15,000. In 2017, after the preliminarystatements were prepared, Kriveloff realized that the truck couldbe used for an additional 5 years, but that the salvage value atthe end of that time would probably be only $10,000. Straight-linedepreciation is being used. Required: A. Preparethe necessary journal entries at December 31, 2017, to record theabove information.B. Prepare new comparative income statements to reflect theadjustments required by items (1)-(3) above. You mayignore income taxes. C. Retainedearnings reported for the end of 2016 was $2,333,000 and at the endof 2015 was $2,195,000. Dividends of $100,000 have beendeclared in each year. Prepare comparative statements ofretained earnings for Kriveloff Company, reflecting appropriateadjustments from items (1)-(3) above, ignoring income taxes.Show all work including formulas