At the End of 2008, and Before Any Adjusting Entries

Essay

At the end of 2008, and before any adjusting entries were made, a company discovered that a tract of land (used as a parking lot next to the newly completed office building) that had been purchased for $20,000 cash on January 1, 2005, was debited in full to the office building account on that date. The building was being depreciated over a 20-year life with no residual value (straight-line). Assume a 25 percent tax rate.
(a) Correct all of the accounts (omit income tax effect).
(b) Record the income tax effects (assume income tax for 2008 has not yet been paid).