Use the Following Information for Questions

question 22

Multiple Choice

Use the following information for questions.
Cheyenne Ltd.'s December 31 year-end financial statements contained the following errors: An insurance premium of $ 3,600 was prepaid in 2019 covering the calendar years 2019, 2020, and 2021. This had been debited to insurance expense. In addition, on December 31, 2020, fully depreciated machinery was sold for $ 1,900 cash, but the sale was not recorded until 2021. There were no other errors during 2020 or 2021 and no corrections have been made for any of the errors. Ignore income tax considerations.
-MissTake Corp. is a small private corporation that does not prepare comparative statements. At the end of their 2020 fiscal year, it was discovered that the 2019 depreciation expense on their computer equipment had been incorrectly debited to maintenance expense. How should MissTake deal with this situation?

• A) Prepare an adjusting entry to debit depreciation expense and credit maintenance expense.
• B) Prepare an adjusting entry to debit retained earnings and credit maintenance expense.
• C) Restate their 2019 financial statements.
• D) Ignore it.

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Definitions:

Emotion-focused Coping Skills

Strategies aimed at managing and reducing the emotional distress associated with stressful situations rather than directly tackling the root problem.

Problem-focused Coping Skills

Techniques aimed at addressing and managing the source of stress directly.

Subjective Well-being

An individual's self-reported assessment of their moods, emotions, and satisfaction with life.

Life Expectancy

The average number of years that a person or animal can expect to live, based on statistical data.