Meagan Co. has the following errors on its books as of December 31, 2018. The books for 2018 have not yet been closed.
a.On January 1, 2016, a truck had been purchased for $28,000. The truck had an estimated life of eight years, but it was expensed in error. Straight-line depreciation with $2,000 salvage value should have been used.
b.On January 1, 2017, the company recorded the purchase of a machine in exchange for a four-year, noninterest-bearing note in the amount of $20,000. Interest rates were then 10%, but no recognition was made of that fact. The present value of $1 at 10% for four periods is
0.683013. Ignore depreciation.)
Required:
Prepare journal entries to correct these errors at December 31, 2018. Ignore income taxes.

Question

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The Answer of Meagan Co. has the following errors on its books as of December 31, 2018. The books for 2018 have not yet been closed.
a.On January 1, 2016, a truck had been purchased for $28,000. The truck had an estimated life of eight years, but it was expensed in error. Straight-line depreciation with $2,000 salvage value should have been used.
b.On January 1, 2017, the company recorded the purchase of a machine in exchange for a four-year, noninterest-bearing note in the amount of $20,000. Interest rates were then 10%, but no recognition was made of that fact. The present value of $1 at 10% for four periods is
0.683013. Ignore depreciation.)
Required:
Prepare journal entries to correct these errors at December 31, 2018. Ignore income taxes.

Meagan Co Has the Following Errors on Its Books as of of December