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3 years ago

Lindy Company's auditor discovered two errors. No errors were corrected during 2020. The errors are described as follows:

Business

1 answer:

vladimir1956 [14]3 years ago

8 0

Answer:

1) We need to reverse the sales entry because the sale actually took place during 2020, not 2021. Since the sale was made in 2020, it should have increased net profit (retained earnings) during 2020, so we now correct both mistakes with the following entry:

Dr Sales revenue 9,100 (sales revenue decreases)

Cr Cost of goods sold 4,100 (COGS decreases)

Cr Retained earnings 5,000 (retained earnings increase)

2) The journal entry must record the depreciation expense during 2021, and must decrease net profits 2020 (retained earnings), depreciation expense per year = $21,000 / 4 = $5,250:

Dr Retained earnings 5,250 (retained earnings decrease)

Dr Depreciation expense 5,250 (expenses decrease)

Cr Accumulated depreciation 10,500 (asset carrying value decreases)

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Answer:

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3 years ago

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Answer and Explanation:

The journal entry is shown below

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Vadim26 [7]

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