You have been engaged to review the financial statements of

You have been engaged to review the financial statements of Lindsay Corporation. In the course of your examination of the work of the bookkeeper hired during the year that just ended, you noticed a number of irregularities for the past fiscal year:
1. Year-end wages payable of $4,100 were not recorded, because the bookkeeper thought that “they were immaterial.”
2. Accrued vacation pay for the year of $29,400 was not recorded, because the bookkeeper “never heard that you had to do it.”
3. Insurance that covers a 12-month period and was purchased on November 1 was charged to insurance expense in the amount of $2,760 “because the amount of the cheque is about the same every year.”
4. Reported sales revenue for the year was $2,310,000 and included all sales taxes charged for the year. The sales tax rate is 5%. Because the sales tax is forwarded to the provincial ministry of revenue, the bookkeeper thought that “the sales tax is a selling expense” and therefore debited the Sales Tax Expense account. At the end of the fiscal year, the balance in the Sales Tax Expense account was $101,300.
Instructions
Prepare the necessary correcting entries, assuming that Lindsay Corporation uses a calendar-year basis and that the books for the fiscal year that just ended are not yet closed.
Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s 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...

Members

  • Access to 2 Million+ Textbook solutions
  • Ask any question from 24/7 available
    Tutors
$9.99
VIEW SOLUTION

OR

Non-Members

Get help from Accounting Tutors
Ask questions directly from Qualified Online Accounting Tutors .
Best for online homework assistance.