Question 40Accrued salaries payable of $102,000 were not recorded at December 31, 2020. Office supplies on hand of $58,000 at December 31, 2021 were erroneously treated as expense instead of supplies inventory. Neither of these errors was discovered nor corrected. The effect of these two errors would cause 2020 net income and December 31, 2020 retained earnings to be understated $102,000 each. 2021 net income to be understated $160,000 and December 31, 2021 retained earnings to be understated $58,000. 2021 net income and December 31, 2021 retained earnings to be understated $58,000 each. 2020 net income to be overstated $44,000 and 2021 net income to be understated $58,000.

Accrued salaries payable that belong to 2020 will be eventually paid in 2021 as an expense of 2021.…

Answered: Accrued salaries payable of $102,000…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question 40

Accrued salaries payable of $102,000 were not recorded at December 31, 2020. Office supplies on hand of $58,000 at December 31, 2021 were erroneously treated as expense instead of supplies inventory. Neither of these errors was discovered nor corrected. The effect of these two errors would cause

		2020 net income and December 31, 2020 retained earnings to be understated $102,000 each.
		2021 net income to be understated $160,000 and December 31, 2021 retained earnings to be understated $58,000.
		2021 net income and December 31, 2021 retained earnings to be understated $58,000 each.
		2020 net income to be overstated $44,000 and 2021 net income to be understated $58,000.