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Bauer Corp. purchased an insurance policy on its plant with liability for harm to its employees in the case of a catastrophe in January, 2017 and paid a five-year premium for $300,000. The whole amount was recorded as Insurance Expense. The error was discovered in early 2020 when the accountants were reconciling 2019 for adjusting entries. The books are still open in 2019. (The tax rate is 40% for all years.) Income before taxes for 2017 is $1,040,000 and 2018 is $1,220,000.
Required: Describe the steps to properly accounting for this error correction. Prepare the necessary journal entries on December 31, 2019.
National Debt
The overall quantity of money that a country's ruling body has procured as loans from diverse origins.
Federal Revenue
The total income received by the government from taxes and other sources.
Corporate Income Tax
A tax on the profits of corporations, calculated based on the net income companies report.
Payroll Tax
Levies placed on either employees or employers, often determined as a percentage of the wages that staff receive from employers.
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