In 2014, Cunningham Company Determined That It Did Not Accrue $\quad$

question 20

Multiple Choice

In 2014, Cunningham Company determined that it did not accrue $15,000 of interest expense in 2013, which caused a material overstatement of income. Assuming a 35% tax rate, which of the following is the entries would be correct to fix the error?

• A) Retained Earnings \(\quad \)\(\quad \)15,000
• Interest Payable\(\quad \)\(\quad \)\(\quad \) 15,000
• Income Tax Refund Receivable (or Payable) \(\quad \)15,000
• Retained Earnings \(\quad \)\(\quad \)\(\quad \)15,000
• B) Retained Earnings \(\quad \)\(\quad \)15,000
• Interest Payable \(\quad \)\(\quad \)\(\quad \)15,000
• Income Tax Refund Receivable (or Payable) \(\quad \)5,250
• Retained Earnings \(\quad \)\(\quad \)5,250
• C) Retained Earnings \(\quad \)\(\quad \)\(\quad \)9,750
• Interest Payable \(\quad \)\(\quad \)\(\quad \)9,750
• Income Tax Refund Receivable (or Payable) \(\quad \)\(\quad \)5,250
• Retained Earnings \(\quad \)\(\quad \)5,250
• D) Retained Earnings \(\quad \)\(\quad \)5,250
• Interest Payable \(\quad \)\(\quad \)\(\quad \)5,250
• Income Tax Refund Receivable (or Payable)\(\quad \)\(\quad \) 9,750
• Retained Earnings \(\quad \)\(\quad \)\(\quad \)\(\quad \)9,750

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Definitions:

Cache Memory

A small-sized type of volatile computer memory that provides high-speed data access to the processor and stores frequently used computer programs, applications, and data.

CPU

The Central Processing Unit is the main element in a computer responsible for carrying out the majority of computational tasks.

Control Unit

The component of a computer's central processing unit (CPU) that directs the operation of the processor.

Overclocking

The practice of increasing the clock speed of a computer's component, such as the CPU, beyond the manufacturer's specifications to achieve higher performance.