Question

Please make corrections entries and adjusting entries:

a. The company pays employee salaries of december period, on January 5 of the following year with the journal:

Employees salaries expense 575.000.000

Cash 575.000.000

b. A car whose book value is zero turns out that the used car can still be sold at $30,000,000 and recorded with the journal:

Cash 30.000.000

Sales 30.000.000

c. A new machine that was purchased at a price of $300,000,000 with an installation fee of $500,000 was recorded as follows:

Machine 300.000.000

Installation expense 500.000

Cash 300.500.000

d. PT.X bought a truck for $500,000,000, like a painting costs for $100,000. In addition, PT.X also permits and finances the acquisition of a driving license (SIM) B for the truck driver of $15,000.
All expenses are charged as trucking costs, paid in cash.

e. Expenditures for insurance costs in the amount of $24,000,000 for two years overall are recorded as insurance costs.
f. The purchase of office stationery on January 5, 2019 in the amount of $3,000,000, and the remaining amount of $1,000,000, has not been made an adjustment to these costs.   

Answer 1

Journal entries

a)

Actual entry should be

On Jan 5th

Employee Salary payable a/c $575,000,000

To Cash a/c $575,000,000

(December month recorded)

So correction entry will be

Employee Salary payable a/c $575,000,000

To Employee Salary expense a/c $575,000,000

(Correction entry accounted. Because wrongly Expense accounted for last year salary)

b)

Actual entry should be

Cash a/c $30,000,000

To Gain on sale of Car a/c $30,000,000

(Sold an asset at $30,000,000 when it's book value is zero. So profit accounted)

So Correction entry will be

Sales a/c $30,000,000

To Gain on Sale of Car a/c $30,000,000

(Correction entry accounted by debiting the wrongly credited sales and giving correct credit to gain on sale, which will further be transferred to Income Summary at year end)

c)

Actual entry should be

Machinery a/c $300,500,000

To Cash a/c $300,500,000

(Machinery bought and installation expenses are capitalised as per the IFRS)

So correction entry will be

Machinery a/c $500,000

To Installation expense a/c $500,000

(Correction entry accounted to capitalise installation costs)

d)

Actual entry should be

Truck a/c $500,100,000

Trucking costs a/c $15,000

To Cash a/c $500,115,000

(Truck purchased and the painting expenses capitalised. The drivers license fee is expensed)

So the correction entry should be

Truck a/c $100,000

To Trucking costs a/c $100,000

(Painting expenses wrongly expensed, now capitalised)

e)

Actual entry should be

Insurance cost a/c $12,000,000

Prepaid Insurance a/c $12,000,000

To Cash a/c $24,000,000

(Insurance for two years paid. Current year Insurance is expensed and next year's expense is accounted as prepaid)

The correction entry is

Prepaid Insurance a/c $12,000,000

To Insurance Cost a/c $12,000,000

(Next year's insurance expense wrongly taken to current year expense account, now transferred to prepaid Insurance account in current asset)

f)

The given details are vague.(Sentence formation is also not proper)

To my understanding, there is a purchase of stationery on Jan 5 worth $3,000,000 and there is $1,000,000 worth of office stationery balance on closing date. So we need to reduce the cost of office stationery by $1,000,000 and transfer it next year.

Adjustment entry should be

Prepaid Office stationery a/c $1,000,000

To Office Stationery a/c $1,000,000

(Balance quantity of office stationery worth $1,000,000 transferred to next year) (assumed that office stationery is grouped as expense account)

[If office stationery is grouped under assets, in that case the adjustment entry will be debiting the Office stationery cost account (which will be expense account) and credit will be given to Office Stationery account (which is grouped under assets)]