Cherokee Company's Auditor Discovered Some Errors

question 62

Essay

Cherokee Company's auditor discovered some errors. No errors were corrected during 2008. The errors are described as follows:
(1.) Beginning inventory on January 1, 2008, was understated by $5,000.
(2.) A two-year insurance policy purchased on April 30, 2008, in the amount of $24,000 was debited to Prepaid Insurance. No adjustment was made on December 31, 2008, or on December 31, 2009.
Required:
Prepare appropriate journal entries (assume the 2009 books have not been closed). Ignore income taxes.

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Definitions:

Recession

A significant decline in economic activity spread across the economy, lasting more than a few months.

Exchange Rate

The worth of one currency when converting it into another currency.

Widget Costs

The expenses associated with the production or manufacture of a generic product, often used in economic examples or analyses.

CAD

CAD, or computer-aided design, is a technology used for the creation, modification, analysis, or optimization of a design, facilitating the engineering process.