A company began operations in Year 1. The following information is provided at the end of each year: Year 1 Year 2 Total salarie
s earned by employees $ 150,000 $ 180,000 Salaries payable 20,000 30,000 What would be the cash paid to employees in Year 2? Multiple Choice $150,000. $160,000. $170,000. $180,000.
1 answer:
Answer:
$ 170,000
Explanation:
In year 2 salaries payable begins with a balance of $ 20,000 and increases by $ 180,000 due to the salaries earned by employees, which adds up $ 200,000. In order to know what was actually the cash paid to employees in Year 2, we must subtract from this amount what is pending at closing, that is, salaries payable at the end of year 2 ($ 30,000). This gives us $ 170,000
Schematically:
(see attached image)
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