Internal auditors for Rockford Products discovered in early 2011 these errors an

Question

Internal auditors for Rockford Products discovered in early 2011 these errors and ommissions in their review of the 2010 financial records.

A material liability for salaries of 13,000 at December 31,2010, was not recorded. The salaries were changed to salary expense when paid.

Equipment costing 5,500 was purchased without first securing a competitive bid, in violation of company policy.

Prior years depreciation expense was materially understated by 13,500 due to a computation error.

Prepare any necessary journal entries required ass a result of the findings of the internal auditors. Ignore income tax effects.

Explanation / Answer

Hi,

Please find the answer as follows:

a)

Salary Expense Dr. 13000

Salary Payable Cr. 13000

b)

No journal entry required.

c)

Depreciation Expense Dr. 13500

Accumulated Depreciation Cr. 13500

Thanks.

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