50.1K

Verified Solution

Link Copied!

Wilkins Food Products Incorporated acquired a packaging machine from Lawrence Specialists Corporation. Lawrence completed construction of the machine on January 1, 2022. In payment for the machine Wilkins issued a three-year installment note to be paid in three equal payments at the end of each year. The payments include interest at the rate of 15%. Lawrence made a conceptual error in preparing the amortization schedule, which Wilkins failed to discover until 2024. As a result of the error, Wilkins understated interest expense by $50,000 in 2022 and $45,000 in 2023.

Required:

1. Indicate in the table below which accounts are incorrect as a result of these errors at January 1, 2024 and whether those accounts are understated or overstated. (Ignore income taxes.)
2. Prepare a journal entry to correct the error.
3. Will Wilkins account for the error (a) retrospectively or (b) prospectively?

Nilkins Food Products Incorporated acquired a packaging machine from Lawrence Specialists Corporation. Lawrence completed construction of the machine on January 1, 2022. In payment for the machine Wilkins issued a three-year installment note to be paid in hree equal payments at the end of each year. The payments include interest at the rate of 15%. Lawrence made a conceptual error in oreparing the amortization schedule, which Wilkins failed to discover until 2024. As a result of the error, Wilkins understated interest expense by $50,000 in 2022 and $45,000 in 2023. Required: 1. Indicate in the table below which accounts are incorrect as a result of these errors at January 1,2024 and whether those accounts are understated or overstated. (lgnore income taxes.) 2. Prepare a journal entry to correct the error. 3. Will Wilkins account for the error (a) retrospectively or (b) prospectively? Complete this question by entering your answers in the tabs below. Indicate in the table below which accounts are incorrect as a result of these errors at January 1, 2024 and whether those accounts are understated or overstated. (Ignore income taxes.) Required: 1. Indicate in the table below which accounts are incorrect as a result of these errors at January 1,2024 and whether thos are understated or overstated. (Ignore income taxes.) 2. Prepare a journal entry to correct the error. 3. Will Wilkins account for the error (a) retrospectively or (b) prospectively? Complete this question by entering your answers in the tabs below. Prepare a journal entry to correct the error. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Journal entry worksheet Wilkins Food Products Incorporated acquired a packaging machine from Lawrence Specialists Corporation. Lawrence completed construction of the machine on January 1, 2022. In payment for the machine Wilkins issued a three-year installment note to be paid in three equal payments at the end of each year. The payments include interest at the rate of 15%. Lawrence made a conceptual error in preparing the amortization schedule, which Wilkins failed to discover until 2024. As a result of the error, Wilkins understated interest expense by $50,000 in 2022 and $45,000 in 2023 Required: 1. Indicate in the table below which accounts are incorrect as a result of these errors at January 1,2024 and whether those accounts are understated or overstated. (lgnore income taxes.) 2. Prepare a journal entry to correct the error. 3. Will Wilkins account for the error (a) retrospectively or (b) prospectively? Complete this question by entering your answers in the tabs below. Will Wilkins account for the error (a) retrospectively or (b) prospectively

Answer & Explanation Solved by verified expert

See Answer