Adjusting Journal Entries for Current Year Liabilities
Lesson:
Sometimes auditors find mistakes that need to be corrected, either because of fraud or mistakes by the original accounting team.
When an expense account is underrecorded (too low):
- Debit the expense
- Credit the liability
When an expense account is overrecorded (too high):
- Debit the liability
- Credit the expense
You're an accountant trying to implement the recommendations made by an external internal.
Here are the relevant facts:
- An auditor reported that the salaries and wages account had been over reported by $97.00.
- The error occurred in the current year's records.
What journal entry or journal entries should be made?
Answer:
-
Accounts payable $97.00 Salaries and wages $97.00