i am currently doing my accounting assignment...
i have a problem with this question..
can someone help me to solve this question?please, i really need the answer because i have to pass up my assignment next week..
i'm weak in accounting,numbering...sorry for troubling u guys...
IN THE COURSE OF ROUTINE CHECKING OF ALL JOURNAL ENTRIES PRIOR TO PREPARING YEAR-END REPORTS, SALLY YOUNT DISCOVERED SEVERAL STRANGE ENTRIES. SHE RECALLED THAT THE PRESIDENT’S SON KEN HAD COME IN TO HELP OUT DURING AN ESPECIALLY BUSY TIME AND THAT HE HAD RECORDED SOME JOURNAL ENTRIES. SHE WAS RELIEVED THAT THERE WERE ONLY A FEW OF HIS ENTRIES, AND EVEN MORE RELIEVED THAT HE HAD INCLUDED RATHER LENGHTLY EXPLANATIONS. THE ENTRIES KEN MADE WERE :
(This is for materials put into process. I don’t find the record that we paid for these, so I’m crediting Cash because I know we’ll have to pay for them sooner or later. )
(This is for bonuses paid to salespeople. I know they’re part of overhead, and I can’t find an account called “Non-factory Overhead” or “Other Overhead” so I’m putting it in Manufacturing Overhead. I have the check stubs, so I know we paid these. )
(This is for the factory worker’s wages. I have a note that payroll taxes are $12000. I still think that’s part of wages expenses, and that we’ll have to pay it all in cash sooner or later, so I credited Cash for the wages and the taxes. )
Raw Material Inventory
(This is for the glue used in the factory. I know we used this to make the products, even thought we didn’t use very much on any one of the products. I got it out of inventory, so I credited an inventory account.)
(a) How should Ken have recorded each of the four events?
(b) If the entry was not corrected, which financial statement (income statement or balance sheet) would be affected? What balances would be overstated or understated?