Question

On april 5, 2016, you discovered that your newly hired bookkeeper made an error when recording a transaction the previous day. the first salary payment this month was for $2,500, which included $700 of salaries payable on march 31. the payment was recorded as a debit to wages expense $2,500 and a credit to cash $2,500. (no reversing entries were used.) prepare the general journal entry (without explanation) needed to correct this error. if no entry is required then write "no entry required."

Answer 1

In order to correct this mistake you will need to adjust the Salaries Payable and Wages Expense accounts.

The bookkeeper incorrectly recorded the salary as an expense to the current period. In order to do it correctly she should have paid the balance on the Salaries Payable for $700, and then recorded the the remaining $1,800 as Wages Expense for the currently period.

The journal entry to correct this mistake is to debit Salaries Payable for $700 and credit Wages Expense for $700. This entry will correct the error so that the wages are expensed to the correct accounting periods.