During 2014, Airdrie Company discovered that in 2013 they had forgotten to record depreciation expense of $12,500 on office equipment.What journal entry would they make in 2014? (You may ignore any income tax effects.)

A. Dr. Office equipment $\quad 12,500$
Cr. Accumulated depreciation $\quad 12,500$

B. Dr. Retained earnings 12,500
Cr. Accumulated depreciation $\quad 12,500$

C. Dr. Depreciation expense $\quad 12,500$
Cr. Accumulated depreciation $\quad 12,500$

D. Dr. Accumulated depreciation $\quad 12,500$
Cr. Retained earnings $\quad 12,500$

Question

During 2014, Airdrie Company discovered that in 2013 they had forgotten to record depreciation expense of $12,500 on office equipment.What journal entry would they make in 2014? (You may ignore any income tax effects.)

A. Dr. Office equipment $\quad 12,500$ 
Cr. Accumulated depreciation $\quad 12,500$

B. Dr. Retained earnings 12,500 
Cr. Accumulated depreciation $\quad 12,500$

C. Dr. Depreciation expense $\quad 12,500$ 
Cr. Accumulated depreciation $\quad 12,500$

D. Dr. Accumulated depreciation $\quad 12,500$ 
Cr. Retained earnings $\quad 12,500$

Quizplus · Accepted Answer

When correcting an error from a prior year, the adjustment is made to retained earnings, not to the current year's income statement, because the error affects a period that has already been closed. The correct entry increases accumulated depreciation to reflect the depreciation that should have been recorded and decreases retained earnings to correct the prior year's net income for the oversight.

During 2014, Airdrie Company Discovered That in 2013 They Had 12,500\quad 12,50012,500

During 2014, Airdrie Company Discovered That in 2013 They Had $\quad 12,500$