REQ. #1 - LEFT DROP DOWN OPTIONS:

• Expenses understated
• Expenses overstated
• Revenue understated
• Revenue overstated

REQ. #1 - RIGHT DROP DOWN OPTIONS:

• Net income understated
• Net income overstated

GENERAL JOURNAL ENTRY DROP DOWN OPTIONS:

• No journal entry required
• Accumulated depreciation
• Buildings
• Cash
• Common stock
• Cost of goods sold
• Deferred rent revenue
• Depreciation expense
• Dividends
• Equipment
• Income tax expense
• Income tax payable
• Insurance expense
• Interest expense
• Interest payable
• Interest revenue
• Inventory
• Notes payable
• Operating expenses
• Paid-in capital - excess of par
• Patent
• Prepaid insurance
• Rent revenue
• Retained earnings
• Salaries expense
• Salaries payable
• Treasury stock

Below are three independent and unrelated errors. a. On December 31, 2020, Wolfe-Bache Corporation failed to accrue salaries expense of $1,300. In January 2021 , when it paid employees for the December 27-January 2 workweek, Wolfe-Bache made the following entry: b. On the last day of 2020 , Midwest Importers received a $80,000 prepayment from a tenant for 2021 rent of a building. Midwest recorded the receipt as rent revenue. The error was discovered midway through 2021. c. At the end of 2020 , Dinkins-Lowery Corporation failed to accrue interest of $7,000 on a note receivable. At the beginning of 2021 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 2020 financial statements? 2. Prepare any journal entries each company should record in 2021 to correct the errors. \begin{tabular}{|l|l|} \hline Required 1 & Required 2 \\ \hline \end{tabular} What would be the effect of each error on the income statement and the balance sheet in the 2020 financial statements? \begin{tabular}{|l|c|c|} \hline Error a \\ \hline Income Statement: & \\ \hline Balance Sheet: & & \\ \hline Error b & & \\ \hline Income Statement: & & \\ \hline Balance Sheet: & & \\ \hline Error c & & \\ \hline Income Statement: & & \\ \hline Balance Sheet: & & \\ \hline \end{tabular} Prepare any journal entries each company should record in 2021 to correct the errors. select "No journal entry required" in the first account field.) Journal entry worksheet Record correction of salaries expense error. Note: Enter debits before credits. Journal entry worksheet Record correction of rent received in advance. Note: Enter debits before credits. Journal entry worksheet Record correction of interest revenue on note receivable. Note: Enter debits before credits