At December 31, 2013, the End of the First Year

question 16

Essay

At December 31, 2013, the end of the first year of operations at Xavion Inc., the firm's accountant neglected to accrue payroll taxes of $27,700 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, 2013.
(b.) Determine the income statement and balance sheet effects of not accruing 2013 payroll taxes at December 31, 2013 (assuming that the payroll taxes were not accrued, as originally stated).
(c.) Assume that when the payroll taxes were paid in January 2014, the payroll tax expense account was charged. Assume that at December 31, 2014, the accountant again neglected to accrue the payroll tax liability, which was $20,400 at that date. Determine the income statement and balance sheet effects of not accruing 2014 payroll taxes at December 31, 2014.

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Definitions:

Milgram Experiment

A psychological experiment conducted by Stanley Milgram in the 1960s to study obedience to authority, where participants were instructed to administer electric shocks to another person.

Stanford University Prison Experiment

A psychological study conducted by Philip Zimbardo in 1971 at Stanford University, where students were assigned roles of prisoners and guards to explore the effects of perceived power.

Generalization

Drawing a conclusion about a certain characteristic of a population based on a sample from it.

Logical Support

The provision of reasons or evidence to justify a claim or argument.