Question

A company pays each of its two office employees each Friday at the rate of $210 per day for a five-day week that begins on Monday. If the monthly accounting period ends on Tuesday and the employees worked on both Monday and Tuesday, the month-end adjusting entry to record the salaries earned but unpaid is:

Answer 1

If the monthly accounting period ends on Tuesday and the employees worked on both Monday and Tuesday, the month-end adjusting entry to record the salaries earned but unpaid is $840.

For two employees and for two days, the adjustment made was 4 times their per day income.

Total month end adjusting entry will be 2×2×$210 = $840

What is Accounting Period?

• A set period of time, such as a calendar year or fiscal year, is referred to as an accounting period in which income balance of whole month is calculated.
• It is used for performing, aggregating, and analyzing accounting operations.
• The accounting period is helpful for investing because prospective investors can assess a company's success by looking at its financial statements, which are based on a set accounting period.

What is Month-End Adjusting Entry?

• Month-End Adjusting Entry is a record created at the conclusion of an accounting period that allows an income or expense to be recognized in the timeframe in which it is incurred.

• Accruals, deferrals, and estimations are the three forms of Month-End Adjusting Entry that are most frequently used.

What is Fiscal Year?

• Companies and governments utilize fiscal years, which are one-year periods, for financial reporting and planning.
• The most typical accounting period utilized to create financial statements is a fiscal year.
• A company's fiscal year is based on 3 determining parameters namely financial reports, external audits, and federal tax filings.

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