I need help answering the following accounting question. I have it partially correct, but it is still missing something. Answers need to address the following: 1) Which financial statement affected, 2) within that Finacial statement which accounts are affected, 3) how the account is affected (over/understatement).

Here is my current answer:

Salaries and Wages Expense would be understated on the income statement due to the wrong entry. Cash, Wages Expense, Factory Wages Payable, Employer Tax Expense, and Employer Taxes Payable would be understated on the balance sheet. To offset the amount of under-applied overhead, the Cost of goods sold should be debited. This will mean that the over-or under-applied balance is closed out to the Cost of Goods Sold account.

Here is the Professor's feedback:

Expenses are not reported on the B/S as you stated.

If COGS is incorrect, as you correctly stated, then Net Income is not correct on the I/S. What impact does this have on the B/S (hint: the closing process of temporary accounts on the I/S to the B/S)?

(3) Wages Expense 120,000 Cash 120,000 (This is for the factory workers' wages. I have a note that employer payroll taxes are $18,000. I still think that's part of wages expense and that we'll have to pay it all in cash sooner or later, so I credited Cash for the wages and the taxes.) Your answer has been saved and sent to the instructor. See Gradebook for score details. If the entry (3) was not corrected, which financial statements (income statement or balance sheet) would be affected? What balances would be overstated or understated