DK Ltd. has consistently failed to record accrued wages for employees' unpaid work in the final week of each year for the last three years. The omitted amounts, all considered significant, are as follows: March 31, 2010 – ₹56,000 March 31, 2011 – ₹51,000 March 31, 2012 – ₹64,000 What would be the appropriate debit or credit to wage expense on March 31, 2012, to correct these prior omissions?
Explanation
The correction entry on March 31, 2012 should account for the net effect of prior omissions. Since the company omitted accruals for three years, the adjustment is the difference between the current year's omission (₹64,000) and the previous year's (₹51,000), resulting in a debit of ₹13,000 to wage expense to properly reflect accrued wages.