Journal entries to correct accounting errors. Give correcting entries for the following situations. In each case, the firm uses the straight-line method of depreciation and closes its books annually on December 31. Recognize all gains and losses currently. a. A firm purchased a computer for $3,000 on January 1, 2006. It depreciated the computer at a rate of 25% of acquisition cost per year. On June 30, 2008, it sold the computer for $800 and acquired a new computer for $4,000. The bookkeeper made the following entry to record the transaction: Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,200 Cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,200 Shareholders’ Assets = Liabilities + Equity (Class.) 13,200 23,200 b. A firm purchased a used truck for $7,000. Its cost, when new, was $12,000. The bookkeeper made the following entry to record the purchase: Truck. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,000 Accumulated Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000 Cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,000 Shareholders’ Assets = Liabilities + Equity (Class.) 112,000 25,000 27,000 c. A firm purchased a testing mechanism on April 1, 2006, for $1,200. It depreciated the testing mechanism at a 10% annual rate. A burglar stole the testing mechanism on June 30, 2008. The firm had not insured against this theft. The bookkeeper made the following entry: Theft Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,200 Testing Machine . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,200 Shareholders’ Assets = Liabilities + Equity (Class.) 21,200 21,200 IncSt S RE