In Preparing the Adjusting Journal Entries for Year 4, the Accountant

question 59

Multiple Choice

In preparing the adjusting journal entries for Year 4, the accountant for a large local law firm discovered that depreciation on furniture, fixtures and office equipment was understated by $40,000 for Year 3. The previous accountant had not depreciated a leasehold improvement because she believed that the improvement would revert to the office owner at the end of the lease term. The present accountant, knowing better, prepared the journal entry to make the correction. That entry, assuming a tax rate of 30%, would include which of the following:

• A) cr. retained earnings $28,000.
• B) cr. accumulated depreciation $28,000.
• C) dr. retained earnings $28,000.
• D) dr. depreciation expense $28,000.

---

Definitions:

Cost Of Production Report

A document detailing the total cost incurred to produce goods or services, often used in manufacturing to track expenses.

Transferred-In Costs

Costs associated with goods that are moved from one production process to another within a manufacturing environment.

Transferred-In Costs

Costs accumulated during a process that are moved to a subsequent process or stage in production.

Process Costing

A costing method used for homogeneous products, where costs are assigned to units of output based on the process or stages they go through in the production cycle.