The following information is available for Zip Corporation:
The company accountant, in preparing financial statements for the year ending December 31, 2018, has discovered the following information:
The company's previous bookkeeper, who has been fired, had recorded depreciation expense on equipment in 2016 and 2017 using the double-declining-balance method of depreciation. The bookkeeper neglected to use the straight-line method of depreciation which is the company's policy. The cumulative effects of the error on prior years was $35,000, ignoring income taxes. Depreciation was computed by the straight-line method in 2018.
Instructions
(a) Prepare the entry for the prior period adjustment.
(b) Prepare the retained earnings statement for 2018.

Question

The following information is available for Zip Corporation:  
The company accountant, in preparing financial statements for the year ending December 31, 2018, has discovered the following information:
The company's previous bookkeeper, who has been fired, had recorded depreciation expense on equipment in 2016 and 2017 using the double-declining-balance method of depreciation. The bookkeeper neglected to use the straight-line method of depreciation which is the company's policy. The cumulative effects of the error on prior years was $35,000, ignoring income taxes. Depreciation was computed by the straight-line method in 2018.
Instructions
(a) Prepare the entry for the prior period adjustment.
(b) Prepare the retained earnings statement for 2018.

Quizplus · Accepted Answer

The Answer of The following information is available for Zip Corporation:  
The company accountant, in preparing financial statements for the year ending December 31, 2018, has discovered the following information:
The company's previous bookkeeper, who has been fired, had recorded depreciation expense on equipment in 2016 and 2017 using the double-declining-balance method of depreciation. The bookkeeper neglected to use the straight-line method of depreciation which is the company's policy. The cumulative effects of the error on prior years was $35,000, ignoring income taxes. Depreciation was computed by the straight-line method in 2018.
Instructions
(a) Prepare the entry for the prior period adjustment.
(b) Prepare the retained earnings statement for 2018.

The Following Information Is Available for Zip Corporation