At December 31, 2016, the End of the First Year

question 8

Essay

At December 31, 2016, 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, 2016.(b.) Determine the income statement and balance sheet effects of not accruing 2016 payroll taxes at December 31, 2016 (assuming that the payroll taxes were not accrued, as originally stated).(c.) Assume that when the payroll taxes were paid in January 2017, the payroll tax expense account was charged. Assume that at December 31, 2017, 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 2017 payroll taxes at December 31, 2017.

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Definitions:

Estuaries

Coastal water bodies where river meets the sea, mixing fresh and saltwater and creating ecosystems with high biological productivity.

Nursery

A place specifically designed for the care and growth of young plants, trees, or children, providing appropriate conditions for development.

Sea

A large body of saltwater that is often connected to an ocean and may be partially or completely surrounded by land.

Estuary

A partially enclosed coastal body of water with one or more rivers or streams flowing into it, and with a free connection to the open sea.