Julie Hartsack Corporation, Week 5 E 22-19 - a problem of accounting errors and prior period corrections.
See attached file for full problem description.© BrainMass Inc. brainmass.com December 19, 2018, 11:43 pm ad1c9bdddf
First, you adjust the balance sheet accounts to the amounts they should be based on info provided. The trick is to decide where the other side of the entry goes: either to current year income and expense (2008) or to a prior accounting period.
(a) 1. Supplies is $2700 and should be $1100. You credit supplies for $1600 and can safely assume that the debit goes to supplies expense.
(a) 2. The narrative tells you that the entry to be made will all be 2008 expense. They don't say that the prior year was wrong and therefore the change happened during 2008. Accrued wages was $1500 at the beginning of the year, and you will have to make a credit entry of $2900 to ...
The solution provides a well presented answer and gives the entry to be made, and explains the rationale for each correction that will be made to adjust for errors in the accounting at year end.