Below are three independent and unrelated errors.On December 31, 2023, Wolfe-Bache Corporation failed to accrue salaries expense of $1,600. In January 2024, when it paid employees for the December 27-January 2workweek, Wolfe-Bache made the following entry:General JournalDebitCreditSalaries expenseCash1,6001,600On the last day of 2023, Midwest Importers received a $86,000 prepayment from a tenant for 2024 rent of a building. Midwest recorded the receipt as rent revenue. The errorwas discovered midway through 2024.At the end of 2023, Dinkins-Lowery Corporation failed to accrue interest of $7,600 on a note receivable. At the beginning of 2024, when the company received the cash, it wasrecorded as interest revenue.Required:For each error:What would be the effect of each error on the income statement and the balance sheet in the 2023 financial statements?Prepare any journal entries each company should record in 2024 to correct the errors.

A journal entry is a basic accounting record that is used to chronologically track financial…

On December 31, 2023, Wolfe-Bache Corporation failed to accrue salaries expense of $1,600. workweek, Wolfe-Bache made the following entry: General Journal Debit Credit Salaries expense Cash 1,600 1,600

On December 31, 2023, Wolfe-Bache Corporation failed to accrue salaries expense of $1,600. workweek, Wolfe-Bache made the following entry: General Journal Debit Credit Salaries expense Cash 1,600 1,600

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Concept explainers

Payroll Entries

Payroll is a comprehensive record of employees that are paid by the company. Payroll classifies employees into various categories according to their function and pays scale (basic wage, allowance, income tax, other taxes, employee loans, etc.). Payroll processes form the bedrock of every organization as it contains sensitive information on the ‘wage and paycheck’ portion of the company’s strength—its employees. The organization needs to keep a track of the employees currently on the payroll, the net payout for the company, the record of transactions related to the employees including deductions and payroll taxes to identify the liability and its effect on the balance sheet (and other financial statements). Payroll records also include qualitative factors such as the conduct of the employee.

Question

Below are three independent and unrelated errors.
On December 31, 2023, Wolfe-Bache Corporation failed to accrue salaries expense of $1,600. In January 2024, when it paid employees for the December 27-January 2
workweek, Wolfe-Bache made the following entry:
General Journal
Debit
Credit
Salaries expense
Cash
1,600
1,600
On the last day of 2023, Midwest Importers received a $86,000 prepayment from a tenant for 2024 rent of a building. Midwest recorded the receipt as rent revenue. The error
was discovered midway through 2024.
At the end of 2023, Dinkins-Lowery Corporation failed to accrue interest of $7,600 on a note receivable. At the beginning of 2024, when the company received the cash, it was
recorded as interest revenue.
Required:
For each error:
What would be the effect of each error on the income statement and the balance sheet in the 2023 financial statements?
Prepare any journal entries each company should record in 2024 to correct the errors.

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