Prepare the necessary adjusting entries for the following taking into account income tax effects (40% tax rate) and assuming that
the books have been closed. (Round answers to 0 decimal places, e.g. 5,275. Credit account titles are automatically indented when
the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the
amounts. List all debit entries before credit entries.)
1. Depreciation on equipment for the year was erroneously recorded as $4,600 rather than the correct figure of $46,000.
2. A further review of depreciation calculations of prior years revealed that equipment depreciation of $7,300 was not
recorded. It was decided that this oversight should be corrected by a prior period adjustment.
No. Account Titles and Explanation Debit Credit
1. Depreciation Expense 41,400
Deferred Tax Liability 16,560
Retained Earnings 24,840
2. Retained Earnings 4,380
Deferred Tax Liability 2,920
Accumulated Depreciation-Equipment 7,300
