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Pretend you are an auditor (I know, I know, this is an amazing dream). Imagine that...

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Accounting

Pretend you are an auditor (I know, I know, this is an amazingdream). Imagine that you are performing the 12/31/18 financialstatement audit of Curly's Coffee and Vinyl Shop. During thesubstantive procedures, you discovered the situations listed below.If it is a 2018 error, then you will need to communicate these tothe client and request that they be fixed within the 2018 financialrecords. In that case, write the adjusting journalentry that the client should book tocorrect. Include date, accounts debited and credited andamounts.

If no adjusting entry is needed, then write: “no adjusting entrynecessary” and provide a brief explanation.

1. You tested their repairs and maintenance expense account andfound an error. They purchased a fancy new espresso machine on01/01/2018 (check #74 for $4,000). They mistakenly expensed it (asrepairs and maintenance expense) instead of capitalizing. Write thejournal entries needed to correct error and properly reflect all2018 accounting entries that should have been booked related thiscapitalized asset, which has an expected 5-year useful life and noestimated salvage value.

Answer & Explanation Solved by verified expert
3.9 Ratings (414 Votes)
The adjustment entry will be required in the Curlys Coffee andVinyl Shop as they have mistakenly expense off the asset in    See Answer
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