Answer:
1. Dr Salaries and wages expense $3,520
Cr Salaries and wages payable $3,520
2. Dr Salaries and wages expense $34,000
Cr Salaries and wages payable $34,000
3. Dr Prepaid Insurance$2,140
Cr Insurance Expense $2,140
4. Dr Sales Revenue $132,797
Cr Sales tax payable $132,797
5. Dr Sales tax payable $108,580
Cr Sales tax expense $108,580
Explanation:
Preparation of the necessary correcting entries, assuming that Headland uses a calendar-year basis
1. Dr Salaries and wages expense $3,520
Cr Salaries and wages payable $3,520
(Being to record wages payable)
2. Dr Salaries and wages expense $34,000
Cr Salaries and wages payable $34,000
(Being to record accrued vacation payment)
3. Dr Prepaid Insurance$2,140
Cr Insurance Expense $2,140
[$2,568-($2,568*2/12)]
(Being to record 2 months prepaid insurance premium)
4. Dr Sales Revenue $132,797
Cr Sales tax payable $132,797
(6%*$2,213,280)
(Being to record sales tax due)
5. Dr Sales tax payable $108,580
Cr Sales tax expense $108,580
(Being to record prior entry)
