The Following Information Is Available for Piper Corporation

question 46

Essay

The following information is available for Piper Corporation:
The company accountant, in preparing financial statements for the year ending December 31, 2011, has discovered the following information:
The company's previous bookkeeper, who has been fired, had recorded depreciation expense on a machine in 2009 and 2010 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 $20,000, ignoring income taxes. Depreciation was computed by the straight-line method in 2011.
Instructions
(a) Prepare the entry for the prior period adjustment.
(b) Prepare the retained earnings statement for 2011.

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Definitions:

Tolerance

The capacity to endure continued exposure to a substance or activity without adverse reaction, often leading to the need for increased amounts to achieve the same effect.

Physical Dependence

A physiological state of adaptation to a substance, resulting in withdrawal symptoms when that substance is reduced or stopped.

Nucleus Accumbens

A region in the brain involved in the reward circuit, associated with pleasure, reinforcement learning, addiction, and fear.

Reward Pathway

A neural pathway in the brain that is activated by rewarding stimuli, playing a critical role in the reinforcement and motivation processes.