At the end of 2015, the payroll supervisor for Henderson, Inc. failed to accrue $24,800 in commissions for their outside salespersons. The cost was recorded in 2016 when the commissions were paid and Commissions Expenses was debited and Cash credited for the full amount. The error was not discovered until late in 2016 while reconciling year-end expenses for 2016. The tax rate for both years was 35%. What is the proper journal entry to correct the error for 2016?

Account Debit Credit Retained Earnings-Prior Period Adj. 16,120 Taxes Receivable 8,680 Commission Expense 24,800

Account Debit Credit Retained Earnings Prior Period Adj. 24,800 Commission Expense 24,800

Account Debit Credit Commission Expense 24,800 Taxes Payable 8,680 Retained Earnings -Prior Period Adj. 16,120

No entry required. The error has self corrected.