Max Weinberg Company discovered the following errors made in January 2008

E4-12 Max Weinberg Company discovered the following errors made in January 2008.

1. A payment of Salaries Expense of $600 was debited to Equipment and credited to Cash, both for $600.
2. A collection of $1,000 from a client on account was debited to Cash $100 and credited to Service Revenue $100.
3. The purchase of equipment on account for $980 was debited to Equipment $890 and credited to Accounts Payable $890.

Instructions
(a) Correct errors by reversing the incorrect entry and preparing the correct entry.
(b) Correct the errors without reversing the incorrect entry.

Click here for the solution: Max Weinberg Company discovered the following errors made in January 2008

Before preparing financial statements for the current year, the chief accountant for Springer Company discovered the following errors in the accounts

E11-16 Before preparing financial statements for the current year, the chief accountant for Springer Company discovered the following errors in the accounts.

The declaration and payment of $50,000 cash dividend was recorded as a debit to Interest Expense $50,000 and a credit to Cash $50,000.
A 10% stock dividend (1,000 shares) was declared on the $10 par value stock when the market value per share was $16. The only entry made was: Retained Earnings (Dr.) $10,000 and Dividend Payable (Cr.) $10,000. The shares have not been issued.
A 4-for-1 stock split involving the issue of 400,000 shares of $5 par value common stock for 100,000 shares of $20 par value common stock was recorded as a debit to Retained Earnings $2,000,000 and a credit to Common Stock $2,000,000.

Instructions
Prepare the correcting entries at December 31.

Click here for the solution: Before preparing financial statements for the current year, the chief accountant for Springer Company discovered the following errors in the accounts

Cato, Inc. is a calendar-year corporation whose financial statements for 2009 and 2010 included errors as follows

Cato, Inc. is a calendar-year corporation whose financial statements for 2009 and 2010 included errors as follows:

Year Ending Inventory Depreciation Expense
2009 $162,000 overstated $135,000 overstated
2010 54,000 understated 45,000 understated

Assume that purchases were recorded correctly and that no correcting entries were made at December 31, 2009, or at December 31, 2010. Ignoring income taxes, by how much should Cato's retained earnings be retroactively adjusted at January 1, 2011?

Click here for the solution: Cato, Inc. is a calendar-year corporation whose financial statements for 2009 and 2010 included errors as follows