Braun Corp.purchased a service vehicle liability policy in July,2015 and paid a five-year premium for $300,000.It was recorded as Insurance Expense.The error was discovered in early 2018 when the accountants were reconciling 2017 for adjusting entries.What is the proper entry to correct the errors if the tax rate for all years is 40%?
A)No entry needed because it will self-correct in two more years.
B) Retained Earnings-Prior Period Adj. 250,000
C) Income Taxes Payable 84,000 Retained Earnings-Prior Period Adj. 126,000
D) Income Taxes Payable 60,000 Retained Earnings-Prior Period Adj. 90,000

Question

Braun Corp.purchased a service vehicle liability policy in July,2015 and paid a five-year premium for $300,000.It was recorded as Insurance Expense.The error was discovered in early 2018 when the accountants were reconciling 2017 for adjusting entries.What is the proper entry to correct the errors if the tax rate for all years is 40%?
A)No entry needed because it will self-correct in two more years. 
B) Retained Earnings-Prior Period Adj. 250,000 
C) Income Taxes Payable 84,000 Retained Earnings-Prior Period Adj. 126,000 
D) Income Taxes Payable 60,000 Retained Earnings-Prior Period Adj. 90,000

Quizplus · Accepted Answer

The Answer of Braun Corp.purchased a service vehicle liability policy in July,2015 and paid a five-year premium for $300,000.It was recorded as Insurance Expense.The error was discovered in early 2018 when the accountants were reconciling 2017 for adjusting entries.What is the proper entry to correct the errors if the tax rate for all years is 40%?
A)No entry needed because it will self-correct in two more years. 
B) Retained Earnings-Prior Period Adj. 250,000 
C) Income Taxes Payable 84,000 Retained Earnings-Prior Period Adj. 126,000 
D) Income Taxes Payable 60,000 Retained Earnings-Prior Period Adj. 90,000