your investigation you find a number of irregularities during
the current year.
1. Insurance for a 6-month period purchased on October 1 of this
year was charged to prepaid insurance in the amount of $5,000.
2. Year-end estimate of bonuses totaled $61,000 and was not
recorded because the payment would not be made until next year.
3. Warranty expense averages 5% on current year sales of
$5,000,000. Warranty expense is automatically debited for 5% of
each sale. During the current year, the company also paid $225,000
in warranty related claims. The bookkeeper thought that the
payments were an expense and debited warranty expense.
4. Office rent is paid quarterly in advance. The first quarter
rent for next year ($25,000) was paid in December and rent expense
was debited. Instructions Prepare the necessary correcting entries,
assuming that Sync Inc. uses a calendar-year basis.