Problem: Linda Company's auditor discovered two errors. No errors were corrected during 2005. The errors are described as follows:
- Journal entries
(a) Merchandise costing $4,000 was sold to a customer for $9,000 on December 31, 2005, but it was recorded as a sale on January 2, 2006. The merchandise was properly excluded from the 2005 ending inventory. Assume the periodic inventory system is used.
(b) A machine with a 5-year life was purchased on January 1, 2005. The machine cost $20,000 and has no expected salvage value. No depreciation was taken in 2005 or 2006. Assume the straight-line method for depreciation.
Required: Prepare appropriate journal entries, if any, to correct the above errors (assume that the 2006 books have not been closed). Ignore income taxes.