Question

Use the following information to answer questions 9 and 10:

• On 12/31/2014, ABC, Inc. determined that it owed its employees $5k for work they did during the final two weeks of 2014 but they will not be paid until 1/14/2015.
• On 1/14/2015, ABC, Inc. paid its employees $10k for the four-week pay period (last two weeks of December, first two weeks of January).

1. What journal entry was recorded by ABC, Inc. on 12/31/2014?

            A. Debit Cash $5k; Credit Salaries Payable $5k

            B. Debit Salaries Payable $5k; Credit Salaries Expense $5k

            C. Debit Salaries Expense $5k; Credit Salaries Payable $5k

            D. Debit Salaries Expense $5k; Credit Cash $5k

2. What journal entry was recorded by ABC, Inc. on 1/14/2015 (the following accounting period)?

            A. Debit Salaries Expense $5k; Debit Salaries Payable $5k; Credit Cash $10k

            B. Debit Salaries Expense $10k; Credit Cash $10k

            C. Credit Salaries Expense $5k; Credit Salaries Payable $5k; Debit Cash $10k

            D. None of the above

Answer 1

Ans 1

            C. Debit Salaries Expense $5k; Credit Salaries Payable $5k

Reason:- Salary is not paid be we have to recognize the expenditure.

Ans 2

            A. Debit Salaries Expense $5k; Debit Salaries Payable $5k; Credit Cash $10k

Reason:-

Cash paid $10,000.

$5000, outstanding salaries paid, and rest current year salary expenditure.

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