The Laura Company Has the Following Errors on Its Books

question 45

Essay

The Laura Company has the following errors on its books as of December 31, 2017. The books for 2017 have not yet been closed.
a. In 2017, fully depreciated equipment with no residual value) that originally cost $8,000 was sold for $700 as scrap. The company credited the $700 proceeds to Equipment.
b. On January 1, 2016, the company recorded the purchase of equipment in exchange for a three-year, noninterest-bearing note payable in the amount of $10,000. Interest rates were then 8%, but no recognition was made of this fact. The present value of $1 at 8% for three periods is 0.7938. Ignore depreciation.)
Required:
Prepare journal entries to correct these errors at December 31, 2017. Ignore income taxes.

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Definitions:

Lowest Bid

The least amount of money offered by a contractor to complete a specified project or job in a bidding process.

Stock Exchange

A marketplace where securities, such as stocks and bonds, are bought and sold.

Sale of Land

The transaction or process whereby ownership of a parcel of land is transferred from one party to another.

Browsewrap Agreement

An online agreement where acceptance of terms and conditions is implied through the use of the website, without requiring an explicit agreement from the user.