Meagan Co Has the Following Errors on Its Books as of of December

question 78

Essay

Meagan Co. has the following errors on its books as of December 31, 2018. The books for 2018 have not yet been closed.
a.On January 1, 2016, a truck had been purchased for $28,000. The truck had an estimated life of eight years, but it was expensed in error. Straight-line depreciation with $2,000 salvage value should have been used.
b.On January 1, 2017, the company recorded the purchase of a machine in exchange for a four-year, noninterest-bearing note in the amount of $20,000. Interest rates were then 10%, but no recognition was made of that fact. The present value of $1 at 10% for four periods is
0.683013. Ignore depreciation.)
Required:
Prepare journal entries to correct these errors at December 31, 2018. Ignore income taxes.

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Definitions:

Proxies

Individuals or entities authorized to act on behalf of others in voting or making decisions.

Takeover Acquisition

A takeover acquisition occurs when one company purchases a majority stake in another company to gain control over its operations and decision-making processes.

Board of Directors

A group of individuals elected by shareholders to oversee the management and make major decisions for a corporation.

Hostile Takeover

An acquisition attempt by a company or individual against the wishes of the target company's management and board of directors.