Answer:
Debit Salaries $16,000, Debit Accrued salaries $4,000 and a Credit bank/cash account $20,000
Explanation:
If the company pays biweekly,under the accrual accounting system, expenses are to be recognized in the period incurred and not necessarily in the period of cash payment.
Given that the company pays $20,000 for a 10 day period, in 2 days (30 and 31 December), the company would have incurred salaries amounting to
= 2/10 × $20,000
= $4,000
The entries required to accrue for this will be
Debit Salaries $4,000
Credit Accrued salaries $4,000
When payment is made on January 10, the required entries
Debit Salaries $16,000 (being the difference between the $20,000 biweekly payments and the expense initially accrued)
Debit Accrued salaries $4,000
Credit bank/cash account $20,000
