In: Accounting
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 $13,000 were not accrued, because the bookkeeper thought that “it was immaterial.” | |
2. | Accrued vacation pay for the year of $35,200 was not recorded, because the bookkeeper “never heard that you had to do it.” | |
3. | Insurance that covers a 12-month period and was purchased on November 1 was charged to insurance expense in the amount of $9,780 “because the amount of the cheque is about the same every year.” | |
4. | Reported sales revenue for the year was $2,740,500 and included all sales taxes charged for the year. The sales tax rate is 5%. Because the sales tax is forwarded to the provincial ministry of revenue, the bookkeeper thought that “sales tax is a selling expense” and therefore debited the Sales Tax Expense account. At the end of the fiscal year, the balance in the Sales Tax Expense account was $122,100. |
QUESTION:
Prepare the necessary correcting entries, assuming that Walsh
Corporation uses a calendar-year basis and that the books for the
fiscal year that just ended are not yet closed.
No. |
Account Titles and Explanation |
Debit |
Credit |
---|---|---|---|
1. |
enter an account title | ||
enter an account title | |||
2. |
enter an account title | ||
enter an account title | |||
3. |
enter an account title | ||
enter an account title | |||
4. |
enter an account title to record sales tax on revenue | ||
enter an account title to record sales tax on revenue | |||
(To record sales tax on revenue.) |
|||
enter an account title to adjust balances to actual | |||
enter an account title to adjust balances to actual | |||
(To adjust balances to actual.) |