Question

Merando Industries employs a 5-day workweek and a September 30 year-end. Normal weekly wages amount to $41760. If September 30 ends on a Wednesday, what is the appropriate journal entry at fiscal year-end

Answer 1

Answer:

Debit: Salaries and wages expense $25,056

Credit: Salaries and wages payable $25,056

(To recognize the salaries and wages payable at year-end)

Explanation:

Merando Industries employs a 5-day workweek - this means $41,760 normal weekly wages can be divided by 5 to arrive at the daily workweek wages, which is $41,760 / 5 = $8,352.

If the fiscal year-end is a Wednesday, the company has to recognize a salaries and wages payable of $25,056 due to the following:

• the workweek remains 2 weekdays to complete
• the company pays at the completion of the 5-day workweek
• there is no need to recognize the remaining 2 days next year as salaries and wages payable since the employer may not have control over the employees - they may decide the exit the company

So, the amount to be recognized will be $8,352 x 3 = $25,056.