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

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

Correct Answer:

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