Cherokee Company's auditor discovered some errors in 2008 when preparing adjusting entries for 2008. Prepare the appropriate journal entries to be made in 2008 to correct these errors so that 2008 net income and retained earnings are correct.
1) A machine with a 5-year life was purchased on January 1, 2007. The machine cost $20,000 and has no expected salvage value. No depreciation was taken in 2007 or 2008. Assume the straight-line method for depreciation
2) A two-year insurance policy purchased on April 30, 2007, in the amount of $24,000 was debited to Prepaid Insurance. No adjustment was made on December 31, 2007, or on December 31, 2008.