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tia_tia [17]
3 years ago
10

You have been engaged to review the financial statements of Sage Corporation. In the course of your examination, you conclude th

at the bookkeeper hired during the current year is not doing a good job. You notice a number of irregularities as follows. 1. Year-end wages payable of $3,540 were not recorded because the bookkeeper thought that "they were immaterial." 2. Accrued vacation pay for the year of $28,800 was not recorded because the bookkeeper "never heard that you had to do it." 3. Insurance for a 12-month period purchased on November 1 of this year was charged to insurance expense in the amount of $2,700 because "the amount of the check is about the same every year." 4. Reported sales revenue for the year is $1,927,080. This includes all sales taxes collected for the year. The sales tax rate is 6%. Because the sales tax is forwarded to the state’s Department of Revenue, the Sales Tax Expense account is debited. The bookkeeper thought that "the sales tax is a selling expense." At the end of the current year, the balance in the Sales Tax Expense account is $93,780. Prepare the necessary correcting entries, assuming that Headland uses a calendar-year basis.
Business
1 answer:
Triss [41]3 years ago
5 0

Answer and Explanation:

The Journal entry is shown below:-

1. Salaries & Wages Expenses Dr, $3,540

         To Salaries & Wages Payable $3,540

(Being salaries and expenses is recorded)

2. Salaries & Wages Expenses Dr, $28,800

         To Salaries & Wages Payable $28,800

(Being salaries and expenses is recorded)

3. Prepaid Insurance Dr, $2,250

        To Insurance Expense $2,250

($2,700 × 10 months ÷ 12)

(Being prepaid insurance is recorded)

4. Sales Revenue Dr, $109,080

($1,927,080 × 6 ÷ (100 + 6))

         To Sales Tax Payable $109,080

(Being Sales revenue is recorded)

5. Sales Tax Payable Dr, $93,780

          To Sales Tax Expense $93,780

(Being sales tax expenses is recorded)

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The terms best refer to anything that can be bought or sold

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This is further explained below.

<h3>What terms best refer to anything that can be bought or sold?</h3>

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While services consist of activities that are carried out for the advantage of the receivers, goods are physical products that are sold to clients. Products such as autos, home appliances, and apparel are all examples of goods.

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goods and sevices

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The marketing method used in the situation described is advertising.

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