On 1 January, 2019, Rata Ltd Purchased and Installed a Telephone

Short Answer

On 1 January, 2019, Rata Ltd purchased and installed a telephone system at a cost of $20,000. The equipment was expected to last five years with a salvage value of $3,000. On 1 January, 2020, more telephone equipment was purchased to tie-in with the current system for $8,000. The new equipment is expected to have a useful life of four years. Through an error, the new equipment was debited to Telephone expense. Rata Ltd uses the straight-line method of depreciation.
Prepare a schedule showing the effects of the error on Telephone expense, depreciation expense, and Net profit for each year and in total beginning in 2019 through the useful life of the new equipment.