Give the correct response to each of the following events:
(a)An overstatement of accrued wages payable by $2,000 at the end of 20x1 would cause retained earnings at the end of 20x2 to be _____ Overstated; _____ Understated by; _____ correct (assuming no correcting entry).
(b)A $6,000 purchase of merchandise on credit in 20x1 was not recorded in 20x1; but it was recorded in 20x2 when the cash was paid.It was discovered during 20x3.The merchandise was not included in the 20x1 ending inventory.Therefore,20x1 income was: _____ Overstated; _____ Understated by; _____ correct.
(c)The 20x2 ending inventory was Overstated $4,000 and no correcting entry has been made.Therefore the 20x3 net income is: _____ Overstated; _____ Understated by; _____ correct.

Question

Quizplus · Accepted Answer

The Answer of Give the correct response to each of the following events:
(a)An overstatement of accrued wages payable by $2,000 at the end of 20x1 would cause retained earnings at the end of 20x2 to be _____ Overstated; _____ Understated by; _____ correct (assuming no correcting entry).
(b)A $6,000 purchase of merchandise on credit in 20x1 was not recorded in 20x1; but it was recorded in 20x2 when the cash was paid.It was discovered during 20x3.The merchandise was not included in the 20x1 ending inventory.Therefore,20x1 income was: _____ Overstated; _____ Understated by; _____ correct.
(c)The 20x2 ending inventory was Overstated $4,000 and no correcting entry has been made.Therefore the 20x3 net income is: _____ Overstated; _____ Understated by; _____ correct.

Give the Correct Response to Each of the Following Events