Question

Assume that the City of Juneau maintains its books and records to facilitate the preparation of its fund financial statements. The city pays its employees bi-weekly on Friday. The fiscal year ended on Wednesday, June 30. Employees had been paid on Friday, June 25. The employees paid from the general fund had earned $90,000 on Monday, Tuesday, and Wednesday (June 28, 29, and 30). What entry, if any, should be made in the city’s general fund on June 30? Debit Expenditures $90,000; credit Accrued wages and salary $90,000 Debit Expenses $90,000; credit Accrued wages and salary $90,000 Debit Expenditures $90,000; credit Encumbrances $90,000 Debit Expenses $90,000; credit Encumbrances $90,000

Answer 1

Answer: Debit expenses $90000; credit accrued wages and salaries $90000

Explanation:

Accrued wages and salaries are liabilities unpaid at the end of a financial period in respect of wages and salaries.

The entry for accrued wages and salaries involves a debit to the expense account and a credit to the accrued wages and salaries account. In the case of the financial statements for City of Juneau described above, we can make the entry thus:

Payment of wages is biweekly, and was last paid on Friday June 25.

The year ended June 30, therefore workers have earned wages for Monday, Tuesday and Wednesday amounting to $90000.

So we have to debit expenses with $90000 and credit accrued wages and salaries with $90000.

Because the accrued wages will be paid in the next financial year, the entries will be reversed at the beginning of that year.

Answer 2

Answer:

Debit Expenses $90,000; credit Accrued wages and salary $90,000

Explanation:

If we assume that the City of Juneau maintains its books and records to facilitate the preparation of its fund financial statements. The employees paid from the general fund had earned $90,000 on Monday, Tuesday, and Wednesday (June 28, 29, and 30).

The entry, if any, should be made in the city’s general fund on June 30 is to: Debit Expenses $90,000; credit Accrued wages and salary $90,000

The amount has been incurred in the month but has not been paid hence it has to be captured as expenses for the month of June while the double entry will be that the amount is captured as accrued wages signifying that it has not been paid within the period it was incurred