Cherokee Company's Auditor Discovered Some Errors

question 101

Essay

Cherokee Company's auditor discovered some errors.No errors were corrected during 2015.The errors are described as follows:
(1. )Beginning inventory on January 1,2015,was understated by $5,000.
(2. )A two-year insurance policy purchased on April 30,2015,in the amount of $24,000 was debited to Prepaid Insurance.No adjustment was made on December 31,2015,or on December 31,2016.
Required:
Prepare appropriate journal entries (assume the 2016 books have not been closed).Ignore income taxes.

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