5. Mondale Winery depreciates its equipment using the group method. The cost of equipment purchased in 2016 totaled $515,000. The estimated residual value of the equipment was $49,000 and the group depreciation rate was determined to be 18%.
What is the annual depreciation for the group? If equipment that cost $51,000 is sold in 2017 for $44,000, what amount of gain or loss will the company recognize for the sale? (Enter your answers in whole dollars.)
8. In 2018, internal auditors discovered that PKE Displays, Inc., had debited an expense account for the $369,000 cost of equipment purchased on January 1, 2015. The equipment’s life was expected to be five years with no residual value. Straight-line depreciation is used by PKE.
1. Prepare the correcting entry assuming the error was discovered in 2018 before the adjusting and closing entries. (Ignore income taxes.)
2. Assume the error was discovered in 2020 after the 2019 financial statements are issued. Prepare the correcting entry.
Prepare the correcting entry assuming the error was discovered in 2018 before the adjusting and closing entries. (Ignore income taxes.) (If no entry is required for a transaction/event, select “No journal entry required” in the first account field.)