Chapter 7
Corporations: The Financial Statements
334
AP-6A (
4
)
On March 17, 2016, the bookkeeper for GIFT Inc. noticed that she made an error when
recording a $44,000 expenditure in the prior fiscal year. She booked the amount to the Repairs
and Maintenance expense account instead of posting to the Equipment account. Write the
journal entry that should be recorded to correct the Equipment account. Ignore the impact of
depreciation. Assume the tax rate is 30%.
Date
Account Title and Explanation
Debit
Credit
AP-7A (
4
)
On April 4, 2016, an auditor noticed that TFK Inc. accidently recorded an insurance
expenditure of $50,000 as an expense instead of as a prepaid. The purchase was made on the
last day of the fiscal period. Write the journal entry that should be recorded in the next fiscal
period to correct the Prepaid Insurance account. Assume the tax rate is 30%.
Date
Account Title and Explanation
Debit
Credit
