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    Maintenance expense error in a prior year

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    10. (1) In 2009, Sage Company discovered that a building addition completed December 30, 2006, at a cost of $360,000 was charged to building and maintenance expense in error. The cost should have been charged to the buildings account. At December 31, 2009, the building addition had 22 years of life remaining and a $100,000 residual value. The entry that should be made as of January 1, 2009, is:

    A. Buildings 23,040
    Building maintenance expense 23,040

    B. Buildings 360,000
    Retained earnings 360,000

    C. Buildings 360,000
    Accumulated depreciation 20,800
    Cumulative effect of a prin change 339,200

    D Buildings 360,000
    Accumulated depreciation 20,800
    Retained earning 339,200

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    Solution Preview

    The entry to pass is
    D Buildings 360,000
    Accumulated depreciation 20,800
    Retained ...

    Solution Summary

    The solution explains the correct entry to rectify the maintenance expense error in a prior year

    $2.19

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