(Question and Answer): Correct the red marks

Correct the red marks

Problem 118 The accountant preparing the income statement for Bakersfield, Inc. had some doubts about the appropriate accounting treatment of the seven items listed below during the fiscal year ending December 31, 2017 Aesiume a tax rate of 40 percent. Assignment page 1. Office equipment purchased January 1, 2017 for $63,510 was incorrectly charged to Supplies Expense at the time of purchase. The office equipment has an estimated three-year service life with no expected salvage value. Bakersfield uses the straight-line method to depreciate office equipment for financial reporting purposes. Due to the error in recording the asset as an expense, the depreciation entry has not been recorded 2. The corporation disposed of its sporting goods division during 2017. This disposal meets the criteria for discontinued operations. The division correctly calculated income from operating this division of $101,250 before taxes and a loss of $11,000 before taxes on the disposal of the division. All of these events occurred in 2017 and have not been recorded. 3. The company recorded advances of $11,100 to employees made December 31, 2017 as Salaries and Wages Expense 4. Dividends of $11,100 during 2017 were recorded as an operating expense. 5. In 2017, Bakersfield changed its method of accounting for inventory from the first-in-first-out method to the average cost method. Inventory in 2017 was correctly recorded using the average cost method. The new inventory method would have resulted in an additional $120,940 of cost of goods sold (before taxes) being reported on prior years income statement. 6. On January 1, 2013, Bakersfield bought a building that cost $85,000, had an estimated useful life of ten years, and had a salvage value of $5,000. Bakersfield uses the straight-line depreciation method to depreciate the building. In 2017, it was estimated that the remaining useful life was eight years and the salvage value was zero. Depreciation expense reported on the 2017 income statement was correctly calculated based on the new estimates. No adjustment for prior years depreciation estimates was made. Your answer is partially correct. Try again. For each item, record corrections to income from continuing operations before taxes, if any. (If there is no effect then please enter 0.) Increase (Decrease) to Income from Continuing Operations No. Description 1. Office equipment purchased January 1, 2017 for $63,510 was incorrectly charged to Supplies Expense at the time of purchase. The office equipment has an estimated three-year service life with no expected salvage value. Bakersfield uses the straight-line method to depreciate office equipment for financial reporting purposes. Due to the error in recording the asset as an expense, the depreciation entry has not been recorded 42340 2. The corporation disposed of its sporting goods division during 2017. This disposal meets the criteria for discontinued operations. The division correctly calculated income from operating this division of $101,250 before taxes and a loss of $11,000 before taxes on the disposal of the division. All of these events occurred in 2017 and have not been recorded 11100 3. The company recorded advances of $11,100 to employees made December 31, 2017 as Salaries and Wages Expense

Don't use plagiarized sources. Get Your Custom Essay on
(Question and Answer): Correct the red marks
Get an essay WRITTEN FOR YOU, Plagiarism free, and by an EXPERT!
Order Essay

Problem 118 The accountant preparing the income statement for Bakersfield, Inc. had some doubts about the appropriate accounting treatment of the seven items listed below during the fiscal year ending December 31, 2017 Aesiume a tax rate of 40 percent. Assignment page 1. Office equipment purchased January 1, 2017 for $63,510 was incorrectly charged to Supplies Expense at the time of purchase. The office equipment has an estimated three-year service life with no expected salvage value. Bakersfield uses the straight-line method to depreciate office equipment for financial reporting purposes. Due to the error in recording the asset as an expense, the depreciation entry has not been recorded 2. The corporation disposed of its sporting goods division during 2017. This disposal meets the criteria for discontinued operations. The division correctly calculated income from operating this division of $101,250 before taxes and a loss of $11,000 before taxes on the disposal of the division. All of these events occurred in 2017 and have not been recorded. 3. The company recorded advances of $11,100 to employees made December 31, 2017 as Salaries and Wages Expense 4. Dividends of $11,100 during 2017 were recorded as an operating expense. 5. In 2017, Bakersfield changed its method of accounting for inventory from the first-in-first-out method to the average cost method. Inventory in 2017 was correctly recorded using the average cost method. The new inventory method would have resulted in an additional $120,940 of cost of goods sold (before taxes) being reported on prior years’ income statement. 6. On January 1, 2013, Bakersfield bought a building that cost $85,000, had an estimated useful life of ten years, and had a salvage value of $5,000. Bakersfield uses the straight-line depreciation method to depreciate the building. In 2017, it was estimated that the remaining useful life was eight years and the salvage value was zero. Depreciation expense reported on the 2017 income statement was correctly calculated based on the new estimates. No adjustment for prior years’ depreciation estimates was made. Your answer is partially correct. Try again. For each item, record corrections to income from continuing operations before taxes, if any. (If there is no effect then please enter 0.) Increase (Decrease) to Income from Continuing Operations No. Description 1. Office equipment purchased January 1, 2017 for $63,510 was incorrectly charged to Supplies Expense at the time of purchase. The office equipment has an estimated three-year service life with no expected salvage value. Bakersfield uses the straight-line method to depreciate office equipment for financial reporting purposes. Due to the error in recording the asset as an expense, the depreciation entry has not been recorded 42340 2. The corporation disposed of its sporting goods division during 2017. This disposal meets the criteria for discontinued operations. The division correctly calculated income from operating this division of $101,250 before taxes and a loss of $11,000 before taxes on the disposal of the division. All of these events occurred in 2017 and have not been recorded 11100 3. The company recorded advances of $11,100 to employees made December 31, 2017 as Salaries and Wages Expense

Expert Answer

 

1)Dividend recorded as operating expense : 11100   [since dividend is not an expense .it is paid out of after tax profit ]

2)

Income statement for the year ending 3 december 2017
Income from continuing operation before income tax 1388100
Less:Income Taxe   [1388100*.40] 555240
Income from continuing operation After tax 832,860
Income /loss from discontinued operation (net of taxes)
Income from operatiton of discontinued operation [101250(1-.40)] 60750
loss on disposal of discontinued operation [-11000(1-.40)] -6600
54150
Net income 778,710

3)

Reatined earning statement
Beginning Retained earning a sof 1 jan 2017 204810
Adjustment to inventory as prior period item [120940(1-.40) -72564
Adjusted retained earning 132246
Add:net income 778710
less:dividend -11100 767610
Ending retained earning 899856

Top Grade Homework
Order NOW For a 10% Discount!
Pages (550 words)
Approximate price: -

Why Work with Us

Top Quality and Well-Researched Papers

We always make sure that writers follow all your instructions precisely. You can choose your academic level: high school, college/university or professional, and we will assign a writer who has a respective degree.

Professional and Experienced Academic Writers

We have a team of professional writers with experience in academic and business writing. Many are native speakers and able to perform any task for which you need help.

Free Unlimited Revisions

If you think we missed something, send your order for a free revision. You have 10 days to submit the order for review after you have received the final document. You can do this yourself after logging into your personal account or by contacting our support.

Prompt Delivery and 100% Money-Back-Guarantee

All papers are always delivered on time. In case we need more time to master your paper, we may contact you regarding the deadline extension. In case you cannot provide us with more time, a 100% refund is guaranteed.

Original & Confidential

We use several writing tools checks to ensure that all documents you receive are free from plagiarism. Our editors carefully review all quotations in the text. We also promise maximum confidentiality in all of our services.

24/7 Customer Support

Our support agents are available 24 hours a day 7 days a week and committed to providing you with the best customer experience. Get in touch whenever you need any assistance.

Try it now!

Calculate the price of your order

Total price:
$0.00

How it works?

Follow these simple steps to get your paper done

Place your order

Fill in the order form and provide all details of your assignment.

Proceed with the payment

Choose the payment system that suits you most.

Receive the final file

Once your paper is ready, we will email it to you.

Our Services

No need to work on your paper at night. Sleep tight, we will cover your back. We offer all kinds of writing services.

Essays

Essay Writing Service

No matter what kind of academic paper you need and how urgent you need it, you are welcome to choose your academic level and the type of your paper at an affordable price. We take care of all your paper needs and give a 24/7 customer care support system.

Admissions

Admission Essays & Business Writing Help

An admission essay is an essay or other written statement by a candidate, often a potential student enrolling in a college, university, or graduate school. You can be rest assurred that through our service we will write the best admission essay for you.

Reviews

Editing Support

Our academic writers and editors make the necessary changes to your paper so that it is polished. We also format your document by correctly quoting the sources and creating reference lists in the formats APA, Harvard, MLA, Chicago / Turabian.

Reviews

Revision Support

If you think your paper could be improved, you can request a review. In this case, your paper will be checked by the writer or assigned to an editor. You can use this option as many times as you see fit. This is free because we want you to be completely satisfied with the service offered.

× Contact Live Agents