Question

Pablo Management has ten employees, each of whom earns $100 per day. They are normally paid on Fridays for work completed Monday through Friday of the same week. Near year-end, the ten employees worked Monday December 31 and Wednesday through Friday, January 2, 3, and 4. New Year’s Day (January 1) was an unpaid holiday. Prepare the year-end adjusting entry for wages expense and record payment of the employees’ wages on Friday January 4.

Answer 1

Answer:

Year end adjusting entry:

                                                     Debit               Credit

Salaries expense                         $1,000

(10*100)

Salaries payable                                                   $1,000

January 4, journal entry:

                                                     Debit               Credit

Salaries expense                        $3,000

(10*100*3)

Salaries payable                          $1,000

Cash                                                                    $4,000

(10*100*4)

Explanation:

The year end adjusting entry that shall be recorded by the Pablo management in its accounts on December 31 in respect of salaries expenses is given as follows:

                                                     Debit               Credit

Salaries expense                         $1,000

(10*100)

Salaries payable                                                   $1,000

The journal entry that shall be recorded by the Pablo management in its accounts on January 4 in respect of salaries paid to employees is given as follows:

                                                     Debit               Credit

Salaries expense                        $3,000

(10*100*3)

Salaries payable                          $1,000

Cash                                                                    $4,000

(10*100*4)