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Maintenance expense error in a prior year

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

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

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