Problem 15-5

Net income
Salary accrued omitted:
2013
2014
Inventory - December 31, 2013 overstated
Prepaid insurance unrecorded on December 31, 2014
Interest receivable unrecorded on December 31, 2014
Other income overstated
Depreciation overstated
Corrected netincome

Adjusting entries - December 31,2014- Book open

1. Retained earnings
Salaries

Salaries
Accrued salaries payable

2. Retained earnings
Inventory - January 1, 2014

3. Prepaid insurance
Insurance

4. Accrued interest receivable

Interest income

5. Miscellaneous income
Accumulated depreciation
Equipment
Gain on sale of equipment

Accumulated depreciation
Depreciation

2013
1,750,000

( 100,000)

( 190,000)

1,460,000

100,000
140,000
190,000
120,000

20,000

220,000
240,000

40,000

2014
2,000,000

100,000
( 140,000)
190,000
120,000
20,000
( 160,000)
40,000
2,170,000

100,000

140,000
190,000

120,000

20,000

400,000
60,000

40,000