On a recent trip to Hongkong, Brian Santos, sales manager of Micro electronic Devices, took his wife at company expense. Erika Tan, vice president of sales and Santos' boss, thought his travel and entertainment expenses seemed excessive. Tan approved the reimbursement, however, because she owed Santos a favor. Tan, well aware that the company president routinely reviewed all expenses recorded in the cash disbursements journal, had the accountant record Santos' wife's expenses in the general journal as follows: Sales Promotion Expense 35,000 Cash 35,000 QUESTION: Based on Case 2, does recording the transaction in the general journal rather than in the cash disbursements journal affect the amounts of cash and total expenses reported in the financial statements? Why?
On a recent trip to Hongkong, Brian Santos, sales manager of Micro electronic Devices, took his wife at company expense. Erika Tan, vice president of sales and Santos' boss, thought his travel and entertainment expenses seemed excessive. Tan approved the reimbursement, however, because she owed Santos a favor. Tan, well aware that the company president routinely reviewed all expenses recorded in the cash disbursements journal, had the accountant record Santos' wife's expenses in the general journal as follows:
Sales Promotion Expense 35,000
Cash 35,000
QUESTION:
Based on Case 2, does recording the transaction in the general journal rather than in the cash disbursements journal affect the amounts of cash and total expenses reported in the financial statements? Why?
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