Assume the weekly payroll of the Abbott Company is $5,000. December 31, the end of the year, falls on a Wednesday and Abbott wil
1 answer:
Answer:
Salary Expense A/c Dr. $3,000
To Salary Payable A/c $3,000
Since salary will be paid on Friday therefore, liability is recorded as salary payable.
Explanation:
As for the provided details,
The working week consists of 5 working days.
Thus, salary expense will be allocated to these 5 working days only. As the salary expense for a week = $5,000
That means salary expense for a day = $5,000/5 = $1,000 for each day.
Now, the financial year ends on December 31 which is Wednesday.
That means three days, of the working week, fall in the financial year.
Therefore, salary expense for the year will be = $1,000 3 = $3,000
Thus, entry for this will be:
Salary Expense A/c Dr. $3,000
To Salary Payable A/c $3,000
Since salary will be paid on Friday therefore, liability is recorded as salary payable.
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