A router expensed instead of capitalized, then corrected through retained earnings, anchors the AC302 Unit 8 error correction entries set for a composite furniture manufacturer. Searches like "ac 302 unit 8 assignment example", "ac302 unit 8 sample" and "ac302 unit 8 example" land here.
What a finished AC302 Unit 8 error correction entries looks like
An effects schedule, one correcting entry, a restated comparative column and a draft note. The schedule works year by year: 2024 income was understated by 300,000 before tax, the 360,000 expensed less one year of depreciation at 60,000, while 2025 was overstated by 60,000 because no depreciation was recorded. The entry, dated in 2026, debits equipment 360,000 and credits accumulated depreciation 120,000, income taxes payable 60,000 and retained earnings 180,000. The restated 2025 column adds 60,000 of depreciation, cuts tax expense by 15,000 and lowers net income by 45,000, with equipment, accumulated depreciation, taxes payable and retained earnings adjusted to agree. The note states the nature of the error, each affected line, the per-share effect and the 225,000 cumulative effect at January 1, 2025.
How a AC302 Unit 8 example is structured
The schedule precedes the entry because the entry's amounts are cumulative and cannot be checked without the year-by-year build. It carries the pretax effect, tax at 25 percent and the net effect for each year, then a running total at each balance sheet date. The correcting entry follows, with a line explaining why retained earnings takes the adjustment: the 2025 books are closed, so the income statement for 2026 must stay clean. The restated comparative column comes next, set beside the figures as originally reported with a column of differences, since ASC 250 requires the comparative years presented to be restated. Opening retained earnings for 2025 is adjusted by 225,000. A final paragraph contrasts the router with a revised useful life for the delivery trucks, handled prospectively without restating anything.
Year-by-year effects
2024 income understated by 300,000 before tax, 2025 overstated by 60,000. Tax at 25 percent and a running total at each year end sit beside both years.
The correcting entry
Dated in 2026 with the 2025 books closed: equipment debited 360,000; accumulated depreciation, taxes payable and retained earnings credited 120,000, 60,000 and 180,000.
2025 restated
Original, restated and difference columns. Depreciation up 60,000, tax expense down 15,000, net income down 45,000, and the balance sheet lines moved to agree.
Opening retained earnings
The 225,000 cumulative effect at January 1, 2025, reported net of tax as an adjustment to the earliest balance the statements present.
Error, estimate or principle
A revised truck life in the same year is handled prospectively. Setting it beside the router shows why one takes the restatement path and the other does not.
Where marks go in AC302 Unit 8
The largest loss is running the correction through 2026 income, which hides a prior-period mistake inside the current year and fails the treatment the unit tests. Close behind is correcting the balance sheet without restating the 2025 comparative figures, so the statements a reader compares still disagree with each other. Graders check the cumulative arithmetic next: crediting retained earnings with 225,000, the effect at the start of 2025, instead of 180,000 at the start of 2026, forgets the depreciation missed during 2025. Ignoring tax inflates that credit from 180,000 to 240,000. Treating the error as a change in estimate, adjusting depreciation from 2026 forward, applies the wrong path of the three. A note that omits the per-share effect or the cumulative effect on opening retained earnings loses its disclosure marks.
Get a AC302 Unit 8 example written to your instructions
What the Unit 8 problem says about the mistake, when it happened, the tax rate, which years the statements present and when the error came to light is everything the entry needs; forward it with the rubric. The schedule, entry, restated column and note return in 24-48h, and a first custom sample is free.
AC302 Unit 8 questions, answered
Why is the credit to retained earnings 180,000 and not 225,000?
Because the entry is made in 2026, and by then two years have passed. The 225,000 is the net effect at the start of 2025: 300,000 of pretax understatement less 25 percent tax. During 2025 no depreciation was recorded, so a further 60,000 pretax, 45,000 net, reversed part of it. At the start of 2026 the cumulative net effect is 180,000, which is what the entry corrects.
What if the error had been found before the 2025 books were closed?
Then the 2024 effect would still go to opening retained earnings as a prior period adjustment, but the missing 2025 depreciation of 60,000 could be recorded as a 2025 expense in the ordinary way, since that year's books would still be open. The entry changes shape while the restated statements end up identical. AC302 problems often vary this timing to test whether the entry follows the closing date.
How does a change in accounting principle differ?
A change in principle, such as moving from one permitted inventory method to another, is also applied retrospectively, restating the prior periods presented as if the new method had always applied. The difference is the reason: a principle change is a choice justified as preferable, while an error was never acceptable. The disclosures differ accordingly, and many AC302 problems include one of each to test the sorting.