At the End of 2015,the Payroll Supervisor for Claro,Inc

question 321

Multiple Choice

At the end of 2015,the payroll supervisor for Claro,Inc.failed to accrue $24,800 in commissions for their outside salespersons.The cost was recorded in 2016 when the commissions were paid and Commissions Expenses was debited and Cash credited for the full amount.The error was not discovered until late in 2016 while reconciling year-end expenses for 2016.The tax rate for both years was 35%.What is the proper journal entry to correct the error for 2016?

• A) Taxes Receivable 8,680 Commission Expense 24,800
• B) Commission Expense 24,800
• C) Taxes Payable 8,680 Retained Earnings -Prior Period Adj. 16,120
• D)No entry required.The error has self corrected.

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Definitions:

Income Statement

A financial document that reports a company's financial performance over a specific accounting period, detailing revenue, expenses, and net income.

Balance Sheet

A record that presents a summary of a business's assets, liabilities, and shareholders' equity at a given time.

Return on Assets

A financial ratio that measures the profitability of a company in relation to its total assets.

Net Income

The profit remaining after all expenses, taxes, and costs have been deducted from total revenue.