P22-3 (Error Corrections and Accounting Changes) Patricia Voga Company is in the process of
adjusting and correcting its books at the end of 2008. In reviewing its records, the following information is compiled.
1. Voga has failed to accrue sales commissions payable at the end of each of the last 2 years, as
follows.
December 31, 2007 $4,000
December 31, 2008 $2,500
2. In reviewing the December 31, 2008, inventory, Voga discovered errors in its inventory-taking
procedures that have caused inventories for the last 3 years to be incorrect, as follows.
December 31, 2006 Understated $16,000
December 31, 2007 Understated $21,000
December 31, 2008 Overstated $ 6,700
Voga has already made an entry that established the incorrect December 31, 2008, inventory amount.
3. At December 31, 2008, Voga decided to change the depreciation method on its office equipment
from double-declining balance to straight-line. The equipment has an original cost of $100,000
when purchased on January 1, 2006. it has a 10-year useful life and no salvage value. Depreciation
expense recorded prior to 2008 under the double-declining balance method was $36,000. Voga
has already recorded 2008 depreciation expense of $12,800 using the double-declining balance
method.
4. Before 2008, Voga accounted for its income from long-term construction contracts on the completedcontract
basis. Early in 2008, Voga changed to the percentage-of-completion basis for accounting
purposes. It continues to use the completed-contract method for tax purposes. Income for 2008 has
been recorded using the percentage-of-completion method. The following information (on page
1199) is available.
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