The Following Information Is Available for Zip Corporation: the Company

question 77

Essay

The following information is available for Zip Corporation: The company accountant, in preparing financial statements for the year ending December 31, 2018, has discovered the following information:
The company's previous bookkeeper, who has been fired, had recorded depreciation expense on equipment in 2016 and 2017 using the double-declining-balance method of depreciation. The bookkeeper neglected to use the straight-line method of depreciation which is the company's policy. The cumulative effects of the error on prior years was $35,000, ignoring income taxes. Depreciation was computed by the straight-line method in 2018.
Instructions
(a) Prepare the entry for the prior period adjustment.
(b) Prepare the retained earnings statement for 2018.

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Definitions:

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