Question

Colaw Co. pays all salaried employees on a biweekly basis. Overtime pay, however, is paid in the next biweekly period. Colaw accrues salaries expense only at its December 31 year end. Data relating to salaries earned in December 2014 are as follows: Last payroll was paid on 12/26/14, for the 2-week period ended 12/26/14. Overtime pay earned in the 2-week period ended 12/26/14 was $20,000. Remaining work days in 2014 were December 29, 30, 31, on which days there was no overtime. The recurring biweekly salaries total $360,000. Assuming a five-day workweek, Colaw should record a liability at December 31, 2014 for accrued salaries of _______.

Answer 1

Answer: the correct answer is $128,000

Explanation:

$20,000 (overtime pay)  + ($ 360,000 / 10*3).  Biweekly salaries are

$360,000 and the week has 5 days that's why we have to consider a biweekly salary for 10 days and multiple that by 3 days.

$20,000 + $108,000 = $128,000