ABC Company has a 5-day workweek, and pays its employees $5,000 every Friday for the week just worked. December 31, 20X3 fell on a Tuesday, but the company failed to accrue wages on December 31, 20X3.

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If the error was discovered on January 10, 20X4, before the books for 20X3 were closed, what is the correcting entry to be recorded January 10 but dated December 31?

A.Wages Expense..............2,000

Wages Payable......................................2,000

B.

Wages Expense..............3,000

Wages Payable..............2,000

Cash...........................................5,000

C.

Wages Expense................3,000

Wages Payable ............................3,000

D.No entry required because it was discovered after December 31.

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If the error was not discovered until May 15, 20X4 after the 20X3 books were closed, what is the impact on the 20X3 financial statements?

A.Expenses understated on the income statement and Payables overstated on the balance sheet

B. Net Income overstated on the income statement and Retained Earnings overstated on the balance sheet

C.Expenses understated on the income statement and Retained Earnings understated on the balance sheet

D.Net Income understated on the income statement and Payables understated on the balance sheet