Question

What is the adjusting journal entry for this?

A.	The company's weekly payroll is $3,000 and is paid each Friday for a five-day work week. Assume
	December 31st falls on a Tuesday, but the employees will not be paid their wages until Friday, January 3rd.

C.	On September 1st of the current year Gatsby, Inc. was paid $45,000 in advance of future installation of alarm systems in
	3 new homes. The amount was credited to the Unearned Revenue - Alarms account. Between September 1st
	and December 31st alarm systems were installed in 2 homes, completing those jobs.

Answer 1

A)

Weekly Salaries expenses for 5 days = $3,000

Salaries payable on December 31 for two days of the week = 3,000 x 2/5

= $1,200

The following adjusting entry will be made on December 31, for salaries payable:

Dec. 31	Salaries expense	1,200
	Salaries payable		1,200

C)

On September 1st of the current year Gatsby, Inc. was paid $45,000 in advance of future installation of alarm systems in 3 new homes.

Between September 1st and December 31st alarm systems were installed in 2 homes, completing those jobs.

Thus, sales revenue earned = 45,000 x 2/3

= $30,000

The following adjusting entry will be made on December 31, for sales revenue earned:

Dec. 31	Unearned revenue	30,000
	Sales revenue		30,000

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