What other step would be taken in connection with the error

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Wilkins Food Products, Inc. acquired a packaging machine from Lawrence Specialists Corporation. Lawrence completed construction of the machine on January 1, 2009. In payment for the machine Wilkins issued a three-year installment note to be paid in three equal payments at the end of each year. The payments include interest at the rate of 10%. Lawrence made a conceptual error in preparing the amortization schedule which Wilkins failed to discover until 2011. As a result of the error, Wilkins understated interest expense by $45,000 in 2009 and $40,000 in 2010.

Required:

1. Determine which accounts are incorrect as a result of these errors at January 1, 2011, before any adjustments. Explain your answer. (Ignore income taxes.)

2. Prepare a journal entry to correct the error.

3. What other step(s) would be taken in connection with the error? 

Reference no: EM131008600

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