Patricia Voga Company is in the process of adjusting and correcting its books at the end of 2005. In reviewing its records, the following information is compiled. Voga has failed to accrue sales commissions payable at the end of each of the last 2 years, as follows: table In reviewing the December 31, 2005, inventory, Vega discovered errors in its inventory-taking procedures that have caused inventories for the last 3 years to be incorrect, as follows: table Voga has already made an entry that established the incorrect December 31, 2005, inventory amount. At December 31, 2005, Voga decided to change the depreciation method on its office equipment from double-declining balance to straight-line. Assume that tax depreciation is higher than the double-declining depreciation taken for each period. The following information is available. (The tax rate is 40%.) table Voga has already recorded the 2005 depreciation expense using the double-declining balance method. Before 2005, Voga accounted for its income from long-term construction contracts on the completed-contract basis. Early in 2005, Voga changed to the percentage-of-completion basis for both accounting and tax purposes. Income for 2005 has been recorded using the percentage-of-completion method. The income tax rate is 40%. The following information is available. table se the attached Excel file to complete this problem. Prepare the journal entries necessary at December 31, 2005, to record the above corrections and changes. The books are still open for 2005. Voga has not yet recorded its 2005 income tax expense and payable amounts so current year-tax effects may be ignored. Prior-year tax effects must be considered in items 3 and 4.
Paper#1942 | Written in 18-Jul-2015Price : $25