The accountant for Fitzroy Cuisine Bistro Pty Ltd alerts the owners of the business as at 30 June 2020 that no provision has been made for annual leave of $1,200 and sick leave of $400 for their new permanent staff member Margaretta.

Required:

As the accountant you will need to;

1. Identify and define the appropriate account(s) to correct the inaction of not providing for annual and sick leave for the new employee Margaretta.
2. Report the impact on the financial statements: Income Statement and Balance Sheet.
3. Discuss the impact on the accounting equation by correcting the annual leave and sick leave.