Andy's Skateboards,Inc

question 15

Essay

Andy's Skateboards,Inc.reported a retained earnings balance of $300,000 at December 31,2013.In June 2014,Andy's internal audit staff discovered two errors that were made in preparing the 2013 financial statements that are considered material:
a.Merchandise costing $50,000 that was on consignment at various consignee locations was mistakenly omitted from the 2013 ending inventory.
b.Equipment purchased in January 2,2013 for $150,000 was capitalized and depreciated using straight-line depreciation,a 10-year useful life,and $5,000 salvage value.The capitalized amount included $30,000 for repairs of the equipment which suffered major damage when it was struck by a forklift during installation.
Required:
a.What amount should Andy's Skateboards report as a prior period adjustment to beginning retained earnings at January 1,2014? (Ignore taxes)
b.Prepare the journal entries that Andy's Skateboards would make in June 2014 to correct the errors made in 2013.Assume that depreciation for 2014 is made as a year-end adjusting entry.(Ignore taxes)

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Definitions:

Agricultural Products

Goods derived from farming and the cultivation of the land, such as crops, livestock, and raw materials.

Marginal Product

The additional output that results from using one more unit of a particular input, keeping all other inputs constant.

Labor-Supply Curve

A graph that shows the relationship between the wages workers receive and the amount of labor they are willing to supply.

Wage Affected

The impact on employees' earnings due to various factors like inflation, demand for labor, or changes in government policy.