A company forgot to record accrued and unpaid employee wages of $350,000 at period-end. This oversight would Understate net income by $350,000. Overstate net income by $350,000. Have no effect on net income. Overstate assets by $350,000. Understate assets by $350,000.

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Answer 1

Textbook Question

Chapter 3, Problem 1MCQ

A company forgot to record accrued and unpaid employee wages of $350,000 at period-end. This oversight would

Understate net income by $350,000.
Overstate net income by $350,000.
Have no effect on net income.
Overstate assets by $350,000.
Understate assets by $350,000.

Expert Solution & Answer

To determine

Accrued and unpaid wages:

These wages refer to those wages which are due but have not been paid off duly. Under the accumulation basis of accounting, the outstanding wages that have been earned should be entered as the wages expenditure and the wages payable or accumulated wages owed.

The effect of the missing record.

Explanation of Solution

Option b, overstate net income by $350,000, is correct.

b.

The rectifying adjustment entry to be recorded for the missing record of accrued and unpaid employee wages is to debit the wages expense and credit the wages payable. When this entry is made, the net income is overstated as the wages expense is a revenue statement account and wages payable is a current accountability account that is stated on the balance sheet.

a.

By the adjusting entry, the wages expense is debited and the wages payable is credited. This would result in the overstating of the net income not understating it.

c.

The wages expense records a debit balance and wages payable a credit balance. The wages payable is stated on the balance sheet and by this entry, the net income records an increase. Thus, it is wrong that there is no effect on the net income.

d.

The adjustment entry made to record the missing balance of accrued and unpaid employee wages is by debiting the wages expense and crediting the wages payable. This will not affect the assets. So, the assets will not be overstated.

e.

The adjustment entry made does not affect the balance of the assets as wages expense is an expense account and wages payable is a liability account. Thus, the assets are not understated.

Thus, option b is correct.

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Students have asked these similar questions

Records showed that as of December 31, 2020, accrued salaries payable of P21,000 were not recorded in Company’s books. In addition, office supplies on hand of P9,000 at December 31, 2020 were erroneously treated as expense instead of supplies inventory. Neither of these errors was discovered nor corrected. What is the effect of these two errors? A. 2020 net income and December 31, 2020 accumulated profits are understated by P9,000 each. B. 2019 net income is overstated by P12,000 and 2020 net income is understated by P9,000 C. 2019 net income and December 31, 2019 accumulated profits are understated by P21,000 each. D. 2020 net income is understated by P30,000 and January 1, 2021 accumulated profits is understated by P9,000

If a company produced a net income of P28,000.00 but failed to adjust for P1,500 in depreciation of equipment and P1,400 in accrued wages. Explain how this errors affected the net income. What will be the corrected net income.

What is the net effect of the errors on the December 31, 2021 retained earnings?( Leave the numerical figure positive, put a dash then identify if OVERSTATED or UNDERSTATED, example: 25000-OVERSTATED)

Answer 2

Textbook Question

Chapter 3, Problem 1MCQ

A company forgot to record accrued and unpaid employee wages of $350,000 at period-end. This oversight would

Understate net income by $350,000.
Overstate net income by $350,000.
Have no effect on net income.
Overstate assets by $350,000.
Understate assets by $350,000.

Expert Solution & Answer

To determine

Accrued and unpaid wages:

These wages refer to those wages which are due but have not been paid off duly. Under the accumulation basis of accounting, the outstanding wages that have been earned should be entered as the wages expenditure and the wages payable or accumulated wages owed.

The effect of the missing record.

Explanation of Solution

Option b, overstate net income by $350,000, is correct.

b.

The rectifying adjustment entry to be recorded for the missing record of accrued and unpaid employee wages is to debit the wages expense and credit the wages payable. When this entry is made, the net income is overstated as the wages expense is a revenue statement account and wages payable is a current accountability account that is stated on the balance sheet.

a.

By the adjusting entry, the wages expense is debited and the wages payable is credited. This would result in the overstating of the net income not understating it.

c.

The wages expense records a debit balance and wages payable a credit balance. The wages payable is stated on the balance sheet and by this entry, the net income records an increase. Thus, it is wrong that there is no effect on the net income.

d.

The adjustment entry made to record the missing balance of accrued and unpaid employee wages is by debiting the wages expense and crediting the wages payable. This will not affect the assets. So, the assets will not be overstated.

e.

The adjustment entry made does not affect the balance of the assets as wages expense is an expense account and wages payable is a liability account. Thus, the assets are not understated.

Thus, option b is correct.

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Answer 3

Textbook Question

Chapter 3, Problem 1MCQ

A company forgot to record accrued and unpaid employee wages of $350,000 at period-end. This oversight would

Understate net income by $350,000.
Overstate net income by $350,000.
Have no effect on net income.
Overstate assets by $350,000.
Understate assets by $350,000.

Expert Solution & Answer

To determine

Accrued and unpaid wages:

These wages refer to those wages which are due but have not been paid off duly. Under the accumulation basis of accounting, the outstanding wages that have been earned should be entered as the wages expenditure and the wages payable or accumulated wages owed.

The effect of the missing record.

Explanation of Solution

Option b, overstate net income by $350,000, is correct.

b.

The rectifying adjustment entry to be recorded for the missing record of accrued and unpaid employee wages is to debit the wages expense and credit the wages payable. When this entry is made, the net income is overstated as the wages expense is a revenue statement account and wages payable is a current accountability account that is stated on the balance sheet.

a.

By the adjusting entry, the wages expense is debited and the wages payable is credited. This would result in the overstating of the net income not understating it.

c.

The wages expense records a debit balance and wages payable a credit balance. The wages payable is stated on the balance sheet and by this entry, the net income records an increase. Thus, it is wrong that there is no effect on the net income.

d.

The adjustment entry made to record the missing balance of accrued and unpaid employee wages is by debiting the wages expense and crediting the wages payable. This will not affect the assets. So, the assets will not be overstated.

e.

The adjustment entry made does not affect the balance of the assets as wages expense is an expense account and wages payable is a liability account. Thus, the assets are not understated.

Thus, option b is correct.

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Answer 4

Textbook Question

Chapter 3, Problem 1MCQ

A company forgot to record accrued and unpaid employee wages of $350,000 at period-end. This oversight would

Understate net income by $350,000.
Overstate net income by $350,000.
Have no effect on net income.
Overstate assets by $350,000.
Understate assets by $350,000.

Expert Solution & Answer

To determine

Accrued and unpaid wages:

These wages refer to those wages which are due but have not been paid off duly. Under the accumulation basis of accounting, the outstanding wages that have been earned should be entered as the wages expenditure and the wages payable or accumulated wages owed.

The effect of the missing record.

Explanation of Solution

Option b, overstate net income by $350,000, is correct.

b.

The rectifying adjustment entry to be recorded for the missing record of accrued and unpaid employee wages is to debit the wages expense and credit the wages payable. When this entry is made, the net income is overstated as the wages expense is a revenue statement account and wages payable is a current accountability account that is stated on the balance sheet.

a.

By the adjusting entry, the wages expense is debited and the wages payable is credited. This would result in the overstating of the net income not understating it.

c.

The wages expense records a debit balance and wages payable a credit balance. The wages payable is stated on the balance sheet and by this entry, the net income records an increase. Thus, it is wrong that there is no effect on the net income.

d.

The adjustment entry made to record the missing balance of accrued and unpaid employee wages is by debiting the wages expense and crediting the wages payable. This will not affect the assets. So, the assets will not be overstated.

e.

The adjustment entry made does not affect the balance of the assets as wages expense is an expense account and wages payable is a liability account. Thus, the assets are not understated.

Thus, option b is correct.

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Answer 5

Textbook Question

Answer 6

Textbook Question

Answer 7

Expert Solution & Answer

To determine

Accrued and unpaid wages:

These wages refer to those wages which are due but have not been paid off duly. Under the accumulation basis of accounting, the outstanding wages that have been earned should be entered as the wages expenditure and the wages payable or accumulated wages owed.

The effect of the missing record.

Explanation of Solution

Option b, overstate net income by $350,000, is correct.

b.

The rectifying adjustment entry to be recorded for the missing record of accrued and unpaid employee wages is to debit the wages expense and credit the wages payable. When this entry is made, the net income is overstated as the wages expense is a revenue statement account and wages payable is a current accountability account that is stated on the balance sheet.

a.

By the adjusting entry, the wages expense is debited and the wages payable is credited. This would result in the overstating of the net income not understating it.

c.

The wages expense records a debit balance and wages payable a credit balance. The wages payable is stated on the balance sheet and by this entry, the net income records an increase. Thus, it is wrong that there is no effect on the net income.

d.

The adjustment entry made to record the missing balance of accrued and unpaid employee wages is by debiting the wages expense and crediting the wages payable. This will not affect the assets. So, the assets will not be overstated.

e.

The adjustment entry made does not affect the balance of the assets as wages expense is an expense account and wages payable is a liability account. Thus, the assets are not understated.

Thus, option b is correct.

Answer 8

Expert Solution & Answer

To determine

Accrued and unpaid wages:

These wages refer to those wages which are due but have not been paid off duly. Under the accumulation basis of accounting, the outstanding wages that have been earned should be entered as the wages expenditure and the wages payable or accumulated wages owed.

The effect of the missing record.

Explanation of Solution

Option b, overstate net income by $350,000, is correct.

b.

The rectifying adjustment entry to be recorded for the missing record of accrued and unpaid employee wages is to debit the wages expense and credit the wages payable. When this entry is made, the net income is overstated as the wages expense is a revenue statement account and wages payable is a current accountability account that is stated on the balance sheet.

a.

By the adjusting entry, the wages expense is debited and the wages payable is credited. This would result in the overstating of the net income not understating it.

c.

The wages expense records a debit balance and wages payable a credit balance. The wages payable is stated on the balance sheet and by this entry, the net income records an increase. Thus, it is wrong that there is no effect on the net income.

d.

The adjustment entry made to record the missing balance of accrued and unpaid employee wages is by debiting the wages expense and crediting the wages payable. This will not affect the assets. So, the assets will not be overstated.

e.

The adjustment entry made does not affect the balance of the assets as wages expense is an expense account and wages payable is a liability account. Thus, the assets are not understated.

Thus, option b is correct.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

To determine

Accrued and unpaid wages:

These wages refer to those wages which are due but have not been paid off duly. Under the accumulation basis of accounting, the outstanding wages that have been earned should be entered as the wages expenditure and the wages payable or accumulated wages owed.

The effect of the missing record.

Answer 12

Explanation of Solution

Option b, overstate net income by $350,000, is correct.

b.

The rectifying adjustment entry to be recorded for the missing record of accrued and unpaid employee wages is to debit the wages expense and credit the wages payable. When this entry is made, the net income is overstated as the wages expense is a revenue statement account and wages payable is a current accountability account that is stated on the balance sheet.

a.

By the adjusting entry, the wages expense is debited and the wages payable is credited. This would result in the overstating of the net income not understating it.

c.

The wages expense records a debit balance and wages payable a credit balance. The wages payable is stated on the balance sheet and by this entry, the net income records an increase. Thus, it is wrong that there is no effect on the net income.

d.

The adjustment entry made to record the missing balance of accrued and unpaid employee wages is by debiting the wages expense and crediting the wages payable. This will not affect the assets. So, the assets will not be overstated.

e.

The adjustment entry made does not affect the balance of the assets as wages expense is an expense account and wages payable is a liability account. Thus, the assets are not understated.

Thus, option b is correct.

Answer 13

Ch. 3 - A company forgot to record accrued and unpaid...Ch. 3 - Prior to recording adjusting entries, the Supplies...Ch. 3 - Prob. 3MCQ Ch. 3 - On November 1, Stockton Co. receives $3,600 cash...Ch. 3 - Prob. 5MCQ Ch. 3 - Prob. 1DQ Ch. 3 - Prob. 2DQ Ch. 3 - Prob. 3DQ Ch. 3 - Prob. 4DQ Ch. 3 - Prob. 5DQ

A company forgot to record accrued and unpaid employee wages of $350,000 at period-end. This oversight would Understate net income by $350,000. Overstate net income by $350,000. Have no effect on net income. Overstate assets by $350,000. Understate assets by $350,000.

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Chapter 3 Solutions