Below are three independent and unrelated errors. a. On December 31, 2017, Wolfe-Bache Corporation failed to accrue

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Below are three independent and unrelated errors.
a. On December 31, 2017, Wolfe-Bache Corporation failed to accrue office supplies expense of $1,800. In January 2018, when it received the bill from its supplier, Wolfe-Bache made the following entry:
Office supplies expense .................................................................... 1,800
Cash .................................................................................................. 1,800
b. On the last day of 2017, Midwest Importers received a $90,000 prepayment from a tenant for 2018 rent of a building. Midwest recorded the receipt as rent revenue.
c. At the end of 2017, Dinkins-Lowery Corporation failed to accrue interest of $8,000 on a note receivable. At the beginning of 2018, when the company received the cash, it was recorded as interest revenue.
Required:
For each error:
1. What would be the effect of each error on the income statement and the balance sheet in the 2017 financial statements?
2. Prepare any journal entries each company should record in 2018 to correct the errors.
Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
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Intermediate Accounting

ISBN: 9781259722660

9th Edition

Authors: J. David Spiceland, James Sepe, Mark Nelson, Wayne Thomas

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