On December 31, 2020, Wolfe-Bache Corporation failed to accrue salaries expense of $1,450. In January 2021, when it paid employees for the December 27–January 2 workweek, Wolfe-Bache made the following entry Salaries expense 1,450 Cash 1,450
On December 31, 2020, Wolfe-Bache Corporation failed to accrue salaries expense of $1,450. In January 2021, when it paid employees for the December 27–January 2 workweek, Wolfe-Bache made the following entry Salaries expense 1,450 Cash 1,450
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter22: Accounting For Changes And Errors.
Section: Chapter Questions
Problem 10P: At the beginning of 2020, Tanham Company discovered the following errors made in the preceding 2...
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Question
Below are three independent and unrelated errors.
- On December 31, 2020, Wolfe-Bache Corporation failed to accrue salaries expense of $1,450. In January 2021, when it paid employees for the December 27–January 2 workweek, Wolfe-Bache made the following entry
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Salaries expense 1,450 Cash 1,450 - At the end of 2020, Dinkins-Lowery Corporation failed to accrue interest of $7,300 on a note receivable. At the beginning of 2021, when the company received the cash, it was recorded as interest revenue.
Required:
For each error:
1. What would be the effect of each error on the income statement and thebalance sheet in the 2020 financial statements?
2. Prepare anyjournal entries each company should record in 2021 to correct the errors. -
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