Manhattan Park adjusts its books each month and closes its books on December 31 each year. The trial balance at January 31, of the current year, before adjustments, follows:

-Refer to the above data. Employees are owed $1,200 for services since the last payday in January to be paid the first week of February. No adjustment was made for this item. As a result of this error:

Question

Manhattan Park adjusts its books each month and closes its books on December 31 each year. The trial balance at January 31, of the current year, before adjustments, follows:
 
-Refer to the above data. Employees are owed $1,200 for services since the last payday in January to be paid the first week of February. No adjustment was made for this item. As a result of this error:

Quizplus · Accepted Answer

Since the wages expense was not recorded, expenses are understated, leading to an overstatement of net income for January.

Manhattan Park Adjusts Its Books Each Month and Closes Its