The Jessica Co. has the following errors on its books as of December 31, 2018. The books for 2018 have not yet been closed. a. On January 1, 2016, a machine had been purchased for $6,500. The machine had an estimated life of five years, but it was expensed in error. Straight-line depreciation with no salvage value should have been used.
b. On January 1, 2017, the company bought a four-year insurance policy for $800 and immediately charged the full premium to expense.
Required:
Prepare journal entries to correct these errors on December 31, 2018. Ignore income taxes.

Answer and Explanation:

The journal entry is given below;

a. Machine or equipment  $6,500

        To Accumulated depreciation ($6,500 × 3 ÷ 5) $3,900

        To Retained earnings $2,600

(being the correction of the error is recorded)

b. Prepaid insurance Dr ($800 ÷ 4 × 2 ) $400

        To Retained earnings $400

(being the correction of the error is recorded)

These two entries should be recorded to correct the given errors

answer; specific performance;

1) the stages a new product goes through from beginning to end, i.e., the stages that a product passes through from introduction through growth, maturity, and decline. 2) the time from initial research and development to the time at which sales and support of the product to customers are withdrawn. 3) the period of time during which a product can be produced and marketed profitably.

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