Question

Your company is a fitness center with employees work 7-days a week and are paid $28,000...

Your company is a fitness center with employees work 7-days a week and are paid $28,000 every two weeks. On December 31, 2015, have worked 3 days into the most current pay period.

The adjusting journal entry on December 31, 2015 is:

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Answer #1

Answer to the Question:

1 week = 7 days

2 weeks pay out =$28000

14 days pay out= $28000

1 day pay out= $28000/14= $2000

on December 31, 2015 3days pay out are accrured but not due to the employees as the due date falls in 4th January 2016. Hence adjustment entry to be passed to close the books as at 31st Dec 2015

Employee compensation account Debit $6000

Outstanding Employee compensation account Credit $6000

on 4th January 2016, payment entry will be passed for the above transaction as

Outstanding Employee compensation account Debit $6000

Bank/Cash account Credit $6000

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