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In 2018, the internal auditors of Development Technologies, Inc., discovered that (a) 2017 accrued wages of...

In 2018, the internal auditors of Development Technologies, Inc., discovered that (a) 2017 accrued wages of $1.1 million were not recognized until they were paid in 2018, and (b) a $2.1 million purchase of merchandise in 2018, was recorded as a debit to Purchases in 2017 instead. The physical inventory count at the end of 2017 was correct.

Ignoring income taxes, prepare the journal entries to correct each error in 2018.

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Answer #1
Accounts titles and Explanation Debit ($) Credit ($)
in million in million
a) Retained earnings             1.10
       Accrued wages/wages payable                  1.10
( To record the correct error in wages)
b) Purchases             2.10
         Retained earnings                  2.10
( To record the correct error in merchandise inventory)
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