Chapter 7
Corporations: The Financial Statements
355
AP-6B (
4
)
On January 31, 2016, the bookkeeper for FLAX Inc. noticed that she made an error when
recording a $96,000 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
Analysis
What if the error were reversed? Write the journal entry that would have to be made if the
$96,000 expense were incorrectly recorded as equipment.
Date
Account Title and Explanation
Debit
Credit
