On January 1, 2014, Sarah Company purchased for $60,000 a truck that had an estimated life of five years and no residual value at the end of its useful life. Sarah uses straight-line depreciation. The cost of the truck was charged to Repairs Expense when purchased in 2014.
Required:
a.Ignoring income taxes, prepare the journal entry to correct the error if it was discovered and corrected on January 1, 2017 (Sarah's year ends on December 31).
b.When preparing the 2017 financial statements, how much depreciation expense should be reported on the comparative 2015 and 2016 income statements?

Question

On January 1, 2014, Sarah Company purchased for $60,000 a truck that had an estimated life of five years and no residual value at the end of its useful life. Sarah uses straight-line depreciation. The cost of the truck was charged to Repairs Expense when purchased in 2014.
Required: 
a.Ignoring income taxes, prepare the journal entry to correct the error if it was discovered and corrected on January 1, 2017 (Sarah's year ends on December 31).
b.When preparing the 2017 financial statements, how much depreciation expense should be reported on the comparative 2015 and 2016 income statements?

Quizplus · Accepted Answer

The Answer of On January 1, 2014, Sarah Company purchased for $60,000 a truck that had an estimated life of five years and no residual value at the end of its useful life. Sarah uses straight-line depreciation. The cost of the truck was charged to Repairs Expense when purchased in 2014.
Required: 
a.Ignoring income taxes, prepare the journal entry to correct the error if it was discovered and corrected on January 1, 2017 (Sarah's year ends on December 31).
b.When preparing the 2017 financial statements, how much depreciation expense should be reported on the comparative 2015 and 2016 income statements?

On January 1, 2014, Sarah Company Purchased for $60,000 a Truck