At December 31, 2019, the End of the First Year

question 41

Essay

At December 31, 2019, the end of the first year of operations at Xavion Inc., the firm's accountant neglected to accrue payroll taxes of $55,400 that were applicable to payrolls for the year then ended.
(a.)Write the journal entry or use the horizontal model to show the effect of the accrual that should have been made as of December 31, 2019.
(b.)Determine the income statement and balance sheet effects of not accruing 2019 payroll taxes at December 31, 2019 (assuming that the payroll taxes were not accrued, as originally stated).
(c.)Assume that when the payroll taxes were paid in January 2020, the payroll tax expense account was charged.Assume that at December 31, 2020, the accountant again neglected to accrue the payroll tax liability, which was $40,800 at that date.Determine the income statement and balance sheet effects of not accruing 2020 payroll taxes at December 31, 2020.

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Definitions:

Conditioning

A process in psychology that involves learning associations between certain stimuli and specific responses.

Imitation

The action of using someone or something as a model and attempting to replicate their behavior, actions, or characteristics.

Ethological Theory

An approach in psychology that emphasizes the biological and evolutionary aspects to explain human behavior and development.

Imprinting Process

A phase-sensitive learning process in which a young animal develops attachments and establishes a particular type of behavior, such as recognition of its mother.