Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. you have been engaged to review the financial stat

You have been engaged to review the financial statements of Water Sync Inc. In the...

90.2K

Verified Solution

Question

Accounting

You have been engaged to review the financial statements of Water Sync Inc. In the midst of your investigation you find a number of irregularities during the current year. 1. Insurance for a 6-month period purchased on October 1 of this year was charged to prepaid insurance expense in the amount of $5,000. 2. Year-end estimate of bonuses totaled $61,000 and was not recorded because the payment would not be made until next year. 3. Warranty expense averages 5% on current year sales of $5,000,000. Warranty expense is automatically debited for 5% of each sale. During the current year, the company also paid $225,000 in warranty related claims. The bookkeeper thought that the payments were an expense and debited warranty expense. 4. Office rent is paid quarterly in advance. The first quarter rent for next year ($25,000) was paid in December and rent expense was debited. Instructions Prepare the necessary correcting entries, assuming that Water Sync Inc. uses a calendar-year basis. (Ignore income tax considerations.)

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students