30) Robin Blind, Inc. recorded the following entries during the year. Put an X in the appropriate box to indicate whether each entry caused net income and total assets to be overstated, understated,...

30) Robin Blind, Inc. recorded the following entries during the year. Put an X in the appropriate box to indicate whether each entry caused net income and total assets to be overstated, understated, or correctly stated.

1. Recorded depreciation for the year using $0 salvage value when the salvage value was expected to be $5,000.

2. Depreciated its airplanes over a life of 35 years, which is 10 years longer than the average life of airplanes.

3. Recorded ordinary repairs as capital expenditures.

4. Recorded the purchase of patents as an expense. The purchase should have been capitalized.

5. Recorded its research and development costs as expenses.

32) A client has asked you to review and correct the following income statement:

Ted Williams Construction

Income Statement

For the Year Ended October 31, 2011

Revenues$900,000

Expenses

Rent$120,000

Utilities180,000

Equipment expense120,000

Salaries220,000

Depreciation100,000

Total expenses740,000

Net income$160,000

Additional information:

a. A $3,500 machine tune-up was recorded as an asset.

b. The costs of buying a $120,000 piece of equipment on the last day of the fiscal year were treated as equipment expense.

c. An asset with a cost of $230,000, a 10-year useful life, and a zero salvage value was depreciated $23,000 for the full year.

d. The power and electricity costs of running a machine were treated as an expense for the year. The costs amounted to $56,000.

e. The costs of insuring a piece of equipment while it was in transit amounted to $5,000, and those costs were capitalized.

Required:

1. List any errors that you find.

2. Correct the errors and prepare another income statement.