Exercise 22-16 You have been engaged to review the financial statements of Cheye
ID: 2533779 • Letter: E
Question
Exercise 22-16 You have been engaged to review the financial statements of Cheyenne Corporation. In the course of your examination, you conclude that the bookkeeper hired during the current year is not doing a good job, You notice a number of irregularities as follows end wages payable of $3,550 were not recorded becte boakkeeper thought that "they were immaterial 2. Accrued vacation pay for the vea ??$29,700 was not recorded because the bookkeeper ,,never heard that you had to do it. 3. Insurance for a 12-month period purchased on November i of this year was charged to insurance expense in the amount of $2,544 because the amount of the check is about the same every year." 4. Reported sales revenue for the year is $2,125,300. This indudes all sales taxes collected for the year. The sales tax rate is 6%, Because the sales tax s forwarded to the state's Department of Revenue, the Sales Tax Expense account is debited. The bokkeeper thought that "the sales tax is a seling expense." At the end of th. arrant year, the balanca in the Sala; Tax Expense account is $103,HCOExplanation / Answer
SOLUTION
S.No. Account titles and Explanation Debit ($) Credit ($) 1. Salaries and Wages Expense 3,550 Salaries and Wages Payable 3,550 2. Salaries and Wages Expense 29,700 Salaries and Wages Payable 29,700 3. Prepaid Insurance ($2,544 / 12 months * 10 months) 2,120 Insurance Expense 2,120 4. Sales revenue ($2,125,300 - $103,800) 2,021,500 Sales Tax Payable 2,021,500 (To record the sales taxes due) Sales Tax Payable 103,800 Sales Tax Expense 103,800 (To correct prior entry)Related Questions
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