Wildhorse Co. purchased machinery that cost $2850000 on January 4, 2019. The entire cost was recorded as an expense. The machinery has a 9-year life and a $185000 residual value. The error was discovered on December 20, 2021. Ignore income tax considerations. Wildhorse's income statement for the year ended December 31, 2021, should show the cumulative effect of this error in the amount of
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Wildhorse Co. purchased machinery that cost $2850000 on January 4, 2019. The entire cost was recorded as an expense. The machinery has a 9-year life and a $185000 residual value. The error was discovered on December 20, 2021. Ignore income tax considerations.
Wildhorse's income statement for the year ended December 31, 2021, should show the cumulative effect of this error in the amount of
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- Shannon Corporation began operations on January 1, 2019. Financial statements for the years ended December 31, 2019 and 2020, contained the following errors: In addition, on December 31, 2020, fully depreciated machinery was sold for 10,800 cash, but the sale was not recorded until 2021. There were no other errors during 2019 or 2020, and no corrections have been made for any of the errors. Refer to the information for Shannon Corporation above. Ignoring income taxes, what is the total effect of the errors on the amount of working capital (current assets minus current liabilities) at December 31, 2020? a. working capital overstated by 4,200 b. working capital understated by 5,800 c. working capital understated by 6,000 d. working capital understated by 9,800Cullumber Co. purchased machinery that cost $3600000 on January 4, 2019. The entire cost was recorded as an expense. The machinery has a 9-year life and a $260000 residual value. The error was discovered on December 20, 2021. Ignore income tax considerations.Cullumber's income statement for the year ended December 31, 2021, should show the cumulative effect of this error in the amount of $0. $2857778. $2800000. $2420000.Sheridan Co. purchased machinery that cost $3250000 on January 4, 2019. The entire cost was recorded as an expense. The machinery has a 9-year life and a $225000 residual value. The error was discovered on December 20, 2021. Ignore income tax considerations.Sheridan's income statement for the year ended December 31, 2021, should show the cumulative effect of this error in the amount of $2577778. $2213889. $0. $2527778.
- Lord Fauntleroy Co. purchased machinery that cost $3,000,000 on January 4, 2019. The entire cost was recorded as an expense. The machinery has a nine-year life and a $200,000 residual value. The error was discovered on December 20, 2021. Ignore income tax considerations. Before the correction was made, and before the books were closed on December 31, 2021, retained earnings was understated by86. Link Co. purchased machinery that cost $3,000,000 on January 4, 2022. The entire cost was recorded as an expense. The machinery has a nine-year life and a $200,000 residual value. The error was discovered on December 20, 2024. Ignore income tax considerations. Link's income statement for the year ended December 31, 2024, should show the cumulative effect of this error in the amount ofOn January 1, 2021, Save Company discovered that it had incorrectly expensed a P2,100,000 machine purchased on January 1, 2018. The entity estimated the machine's original useful life to be 10 years and the residual value at P100,000. The entity used the straight line method of depreciation and is subject to a 30% income tax rate. In the December 31, 2021 financial statements, what amount should be reported as a prior period error?
- HunterX Company purchased pressing machinery that cost P54,000 on January 4, 2023. The entire cost was recorded as an expense. The machinery has a nine-year life and a P50,400 depreciable cost. The error was discovered on December 20, 2025. Ignoring income tax consideration, HunterX statement of comprehensive income for the year ended December 31, 2025 should show depreciation expense in the amount of A. 48.400 B. 32.700 C. 16,800 Before the correction was made, the January 1, 2025, retained earnings was understated by A 54.000 B. 48 400 C. 42.800In 2021, internal auditors discovered that PKE Displays, Inc. had debited an expense account for the $356,000 cost of equipment purchased on January 1, 2018. The equipment’s life was expected to be five years with no residual value. Straight-line depreciation is used by PKE. Required:1. Determine the cumulative effect of the error on net income over the three-year period from 2018 through 2020, and on retained earnings by the end of 2020.2. Prepare the correcting entry assuming the error was discovered in 2021 before the adjusting and closing entries. (Ignore income taxes.)3. Assume instead that the equipment was disposed of in 2022 and the original error was discovered in 2023 after the 2022 financial statements were issued. Prepare the correcting entry in 2023.Oriole Company purchased equipment that cost $2595000 on January 1, 2020. The entire cost was recorded as an expense. The equipment had a 9-year life and a $103800 residual value. Oriole uses the straight-line method to account for depreciation expense. The error was discovered on December 10, 2022. Oriole is subject to a 30% tax rate. Oriole’s net income for the year ended December 31, 2020, was understated by $2595000. $2318200. $1816500. $1622740.
- In 2024, internal auditors discovered that PKE Displays, Incorporated, had debited an expense account for the $356,000 cost of equipment purchased on January 1, 2021. The equipment's life was expected to be five years with no residual value. Straight-line depreciation is used by PKE. Required: 1. Determine the cumulative effect of the error on net income over the three-year period from 2021 through 2023, and on retained earnings by the end of 2023. 2. Prepare the correcting entry, assuming the error was discovered in 2024 before the adjusting and closing entries. (Ignore income taxes.) 3. Assume instead that the equipment was disposed of in 2025 and the original error was discovered in 2026 after the 2025 financial statements were issued. Prepare the correcting entry in 2026. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Determine the cumulative effect of the error on net income over the three-year period from 2021 through 2023, and on…In 2024, internal auditors discovered that PKE Displays, Incorporated, had debited an expense account for the $368,000 cost of equipment purchased on January 1, 2021. The equipment's life was expected to be five years with no residual value. Straight-line depreciation is used by PKE. Required: 1. Determine the cumulative effect of the error on net income over the three-year period from 2021 through 2023, and on retained earnings by the end of 2023. 2. Prepare the correcting entry, assuming the error was discovered in 2024 before the adjusting and closing entries. (Ignore income taxes.) 3. Assume instead that the equipment was disposed of in 2025 and the original error was discovered in 2026 after the 2025 financial statements were issued. Prepare the correcting entry in 2026. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Determine the cumulative effect of the error on net income over the three-year period from 2021 through 2023, and…Pharoah Company purchased equipment that cost $3180000 on January 1, 2020. The entire cost was recorded as an expense. The equipment had a 9-year life and a $127200 residual value. Pharoah uses the straight-line method to account for depreciation expense. The error was discovered on December 10, 2022. Pharoah is subject to a 30% tax rate. Pharoah’s net income for the year ended December 31, 2020, was understated by $3180000. $2840800. $2226000. $1988560.