Question

You have been engaged to review the financial statements of Gottschalk Corporation. In the course of...

You have been engaged to review the financial statements of Gottschalk Corporation. In the course of your examination, you conclude the bookkeeper hired is not doing a good job. You notice a number of irregularities as follows.

1. Year end wages payable of $3,400 were not recorded because the bookkeeper thought they were "immaterial."

2. Accrued vacation pay for the year of $31,100 were not recorded because the bookkeeper "never heard that you had to do it."

3. Insurance for a 12 month period was purchased on November 1st of this year was charged to insurance expense in the amount of $2,640 because "the amount of the check is about the same every year."

4. Reported sales revenue for the year is $2,120,000. This includes all sales taxes collected for the year. The sales tax rate is 6%. Because the sales tax is forwarded to the State's Department of Revenue, the Sales Tax Expense account is debited. The bookkeeper thought that "the sales tax was a selling expense." At the end of the current year, the balance in the Sales Tax Expense account is $103,400.

Prepare the necessary correcting entries, assuming Gottschalk Corporation uses a calendar-year basis. The books for the current year have not been closed.

Homework Answers

Answer #1
Journal Entry
Date Particulars Dr. Amt. Cr. Amt.
1 Salaries & Wages Expenses        3,400.00
Salaries & Wages Payable        3,400.00
2 Salaries & Wages Expenses      31,100.00
Salaries & Wages Payable      31,100.00
3 Prepaid Insurance        2,200.00 $2,640 X 10/12
Insurance Expense        2,200.00 $2,640 X 10/12
4-1 Sales Revenue    120,000.00 $2,120,000 X 6/106
Sales Tax Payable    120,000.00 $2,120,000 X 6/106
4-2 Sales Tax Payable    103,400.00
Sales Tax Expense    103,400.00
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Exercise 21-17 Please explain how you come to the answer so I can learn how to...
Exercise 21-17 Please explain how you come to the answer so I can learn how to do it please. You have been engaged to review the financial statements of Walsh Corporation. While examining the work of the bookkeeper hired during the year that just ended, you noticed a number of irregularities for the past fiscal year: 1. Year-end wages payable of $13,600 were not accrued, because the bookkeeper thought that “it was immaterial.” 2. Accrued vacation pay for the year...
During the course of your examination of the financial statements of the Hales Corporation for the...
During the course of your examination of the financial statements of the Hales Corporation for the year ended December 31, 2021, you discover the following: An insurance policy covering three years was purchased on January 1, 2021, for $8,100. The entire amount was debited to insurance expense and no adjusting entry was recorded for this item. During 2021, the company received a $975 cash advance from a customer for merchandise to be manufactured and shipped in 2022. The $975 was...
You have been assigned to examine the financial statement of SPD Company for the year 2015....
You have been assigned to examine the financial statement of SPD Company for the year 2015. You discovered the following situations :        a.    In October, 2013 the company sold goods $4,600 on credit. This revenue was mistakenly recorded as debit cash and credit sales $6,400 (All cash received in 2014).         b. On Dec 31, 2014 the company forgot to adjust accrued interest $1,200 from notes payable. (Interest Expense was recorded when it paid during 2015). Required :    (Ignore...
You have been assigned to examine the financial statements of PC corp. for the year ended...
You have been assigned to examine the financial statements of PC corp. for the year ended December 31, 2019, as prepared following IFRS. You discover the following situations: Physical inventory count on Dec31, 2018, improperly excluded merchandise costing $13,000 that had been temporarily stored in a public warehouse. PC uses periodic inventory system Physical inventory count on Dec31,2019, improperly included merchandise with a cost of $26,000 that had been recorded as a sale on Dec27, 2019, and was being held...
You are reviewing the financial statements for Jones Electric Company for 2019 and have found a...
You are reviewing the financial statements for Jones Electric Company for 2019 and have found a series of errors. Account  Balance Supplies $36,000 Prepaid insurance $18,000 Unearned revenue $50,000 Accrued liabilities $12,000 Office expenses $30,000 Property, plant and equipment $72,000 Accumulated depreciation ($10,400) Retained earnings, 1/1/19 $150,000 Prepare correcting journal entries (a) if the books are open and (b) if the books are closed. c. Assume that Jones Electric is only providing an income statement and balance sheet for the current...
ABC Company has a preliminary figure for earnings of $500,000, for the year ended 31 December...
ABC Company has a preliminary figure for earnings of $500,000, for the year ended 31 December 2017. The company also has provided the following information in relation to its annual financial information. a. The company has a bank loan outstanding for $400,000, which has been outstanding for the entire year. The interest has not been paid or recorded for the final quarter. Interest is based on an annual rate of 4%. b. Property tax of $24,000 was paid in September,...
PREPARE ADJUSTING ENTRIES... X.) Based on your review of the cash balances, you note that there...
PREPARE ADJUSTING ENTRIES... X.) Based on your review of the cash balances, you note that there was an overdraft of $12,000 in one of your bank accounts. However, there are many bank accounts at the specific bank where the account with the overdraft is deposited. The total cash at this bank equaled a debit balance of $180,000. The previous accountant moved the overdraft to Accounts Payable. You also note the Board of Directors has restricted $65,000 of cash for future...
The following is a summary of information presented on the financial statements of a company on...
The following is a summary of information presented on the financial statements of a company on December​ 31, 2019. Account 2019 2018 Net Sales Revenue ​$607,000 ​$502,000 Cost of Goods Sold ​450,000 ​406,000 Gross Profit ​157,000 ​96,000 Selling Expenses ​54,000 ​52,000 Net Income Before Income Tax Expense ​103,000 ​44,000 Income Tax Expense ​38,000 ​24,000 Net Income ​$65,000 ​$20,000 With respect to net sales​ revenue, a horizontal analysis reveals​ ________. A. a​ 240.62% decrease in net sales revenue B. a​ 20.92%...
MCQ Cheyenne Ltd's December 31 year-end financial statements contained the following errors December 31, 2019 December...
MCQ Cheyenne Ltd's December 31 year-end financial statements contained the following errors December 31, 2019 December 31, 2020 Ending inventory 1500 understated 2200 overstated Depreciation expense 400 understated An insurance premium of $3600 was prepaid in 2019 covering the calendar years, 2019, 2020, and 2021. This had been debited to insurance expense. In addition on December 31, 2020, fully depreciated machinery was sold for $1900 cash but the sale was not recorded until 2021. There were no other errors during...
URGENT! You are engaged to audit Tesla Corporation for the year ended December 31, 2019. Inventory...
URGENT! You are engaged to audit Tesla Corporation for the year ended December 31, 2019. Inventory was counted on December 30 and only merchandise shipped by Tesla Corporation to customers up to and including December 30, 2019, has been eliminated from inventory. The inventory as determined by physical inventory count has been recorded on the books by the company’s controller. No perpetual inventory records are maintained. All sales are made on an FOB–shipping point basis. You are to assume that...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT