Still have this questions incorrect and I do not understand...

Here is my current answer:

If the third entry was not corrected, both the income statement and the balance sheet would be affected. On the income statement, Cost of Goods Sold is understated and Wages Expense is overstated. On the balance sheet, Cash, Factory Wages Payable, and Employer Payroll Taxes Payable are understated.

His feedback:

Part 6 not passed.

3. Expenses are not reported on the B/S as you stated.Also, this entry is associated with factory wages, a product cost.As stated in previous feedback,product costs are not separately reported on the financial statements.What accounts are impacted on the financial statements when product costs are recorded incorrectly (hint: COGS and closing process)?