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The first audit of the books of Kingbird Company was made for the year ended December 31, 2021. In examining the books, the auditor found that certain items had been overlooked or incorrectly handled in the last 3 years. These items are: 1. At the beginning of 2029 , the company purchased a machine for $462.000 (salvage value of $46,200 ) that had a useful life of 6 years, The bookkeeper used straight-line depreciation but failed to deduct the salvage value in computing the depreciation basefor the 3 years. 2. At the end of 2020 , the company failed to accrue sales salaries of $49,000. 3. A tax lawsuit that involved the year 2019 was settled late in 2021, It was determined that the company owed an additional \$85,000 in taxes related to 2019 . The company did not record a liability in 2019 or 2020 because the possibility of los 5 was corsidered remote, and charged the $85,000 to a loss account in 2021 . 4. Kingbird Company purchased a copyright from another company early in 2019 for $50,000. Kingbird had not amortized the coprright because its value had not diminished. The copyright has a useful life at purchase of 20 years. 5. In 2021, the company wrote off $90,000 of imventory considered to be obsolete; this loss was charged directly to Retained Earnings: No. Account Tilies and Explanation Debit Credit I. I 2 3

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