You have been engaged to review the financial statements of Flint 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. 1.   Year-end wages payable of $3,520 were not recorded because the bookkeeper thought that “they were immaterial.” 2.   Accrued vacation pay for the year of $34,000 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 $2,568 because “the amount of the check is about the same every year.” 4.   Reported sales revenue for the year is $2,213,280. 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 $108,580. Prepare the necessary correcting entries, assuming that Flint uses a calendar-year basis. The books for the current year have not been closed. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) No. Account Titles and Explanation Debit Credit 1. Enter an account title to record year-end wages payable Enter a debit amount Enter a credit amount   Enter an account title to record year-end wages payable Enter a debit amount Enter a credit amount 2. Enter an account title to record accrued vacation pay Enter a debit amount Enter a credit amount   Enter an account title to record accrued vacation pay Enter a debit amount Enter a credit amount 3. Enter an account title to correct insurance expense Enter a debit amount Enter a credit amount   Enter an account title to correct insurance expense Enter a debit amount Enter a credit amount 4. Enter an account title to record the sales taxes due Enter a debit amount Enter a credit amount   Enter an account title to record the sales taxes due Enter a debit amount Enter a credit amount   (To record the sales taxes due.)       Enter an account title to correct prior entry Enter a debit amount Enter a credit amount   Enter an account title to correct prior entry Enter a debit amount Enter a credit amount   (To correct prior entry.)

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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You have been engaged to review the financial statements of Flint 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.

1.   Year-end wages payable of $3,520 were not recorded because the bookkeeper thought that “they were immaterial.”
2.   Accrued vacation pay for the year of $34,000 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 $2,568 because “the amount of the check is about the same every year.”
4.   Reported sales revenue for the year is $2,213,280. 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 $108,580.


Prepare the necessary correcting entries, assuming that Flint uses a calendar-year basis. The books for the current year have not been closed. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

No.
Account Titles and Explanation
Debit
Credit
1.
Enter an account title to record year-end wages payable
Enter a debit amount
Enter a credit amount
 
Enter an account title to record year-end wages payable
Enter a debit amount
Enter a credit amount
2.
Enter an account title to record accrued vacation pay
Enter a debit amount
Enter a credit amount
 
Enter an account title to record accrued vacation pay
Enter a debit amount
Enter a credit amount
3.
Enter an account title to correct insurance expense
Enter a debit amount
Enter a credit amount
 
Enter an account title to correct insurance expense
Enter a debit amount
Enter a credit amount
4.
Enter an account title to record the sales taxes due
Enter a debit amount
Enter a credit amount
 
Enter an account title to record the sales taxes due
Enter a debit amount
Enter a credit amount
 
(To record the sales taxes due.)
   
 
Enter an account title to correct prior entry
Enter a debit amount
Enter a credit amount
 
Enter an account title to correct prior entry
Enter a debit amount
Enter a credit amount
 
(To correct prior entry.)
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