Question about Analyzing and Computing Accrued Wages Liability and Expense: Drip Company pays its employees on the 1st and 15th of each month. It is March 31 and Drip is preparing financial statements for this quarter. Its employees have earned $41,000 since the 15th of March and have not yet been paid.

1. How will Drips balance sheet and income statement reflect the accrual of wages on March 31? Please circle increase or decrease and enter the amount in the parentheses.

(Increase or decrease) wages payable by $ ( ) on the balance sheet.

(Increase or decrease) wages expense by $ ( ) on the income statement.

2. Indicate the effect on the balance sheet and income statement accounts if Drip failed to make this accural (please circle overstated or understated). Please explain your answer.

Liabilities (overstated or understated)

Wages Expense (overstated or understated)

Income (overstated or understated)

Stockholders' Equity (overstated or understated)

Explain your answer: