Question

Analyzing and Computing Accrued Wages Liability and Expense

Answer 1

Answer:

Decrease wages payable by $32,000 on the balance sheet.

Decrease wages expense by $32,000 on the income sheet.

Explanation:

Wages Expense accrued entry effects the expenses and liabilities as this expenses not been paid yet. Failing to record this adjusting entry the Expenses on the income statement will be understated and Income statement is  reporting overstated profit because expenses are deducted from the income. On the other hand as employee are not been paid so there is a liability which business need to pay in future. Failing to record this too the Liability of Wages payable is understated and Balance sheet is reporting a lower liability of wages payable. So both wages payable and Wages Expenses are decreased due to omission of this adjusting transactions.