Question

Horton’s Donutshas 12 employees who are paid $18 per hour. The company purchases its inventory, on...

Horton’s Donutshas 12 employees who are paid $18 per hour. The company purchases its inventory, on account, daily. At December 31, 2016, each of Horton’s Donuts’ employees had worked 20 hours which had not been paid or recorded. Also on this date, the company had taken receipt of $74,880of inventory from its suppliers which had not been recorded in the accounts. As of the beginning of 2016, the company had equipment totaling $1,440,000which was depreciated at $144,000 per year.Prior to adjustments, the company’s trial balance showed $205,680 in the wages expense account and $100,320of inventory.

27. If Horton’s Donuts makes the appropriate adjusting entry, how much will be reported on the December 31, 2016 income statement as wage expense?

A) $102,840

B) $210,000

C) $   4,320

D) $208,790

27. If Horton’s Donuts makes the appropriate adjusting entry, how much will be reported on the December 31, 2016 income statement as wage expense?

A) $102,840

B) $210,000

C) $   4,320

D) $208,790

28. If Horton’s Donuts makes the appropriate adjusting entry, which of the following is one part of the journal entry that will be made when the payment of wages is made in January?

A) Debit Wages Payable for $4,320

B) Debit Wages Expense for $1,555

C) Credit Wages Payable for $4,320

D) Credit Cash for $38,995

Homework Answers

Answer #1

27.

Wages payable on December 31 = 12 x 20 x 18

= $4,320

Wages appearing in the unadjusted trial balance = $205,680

Hence, total wages expense of the year = 205,680 + 4,320

= $210,000

Correct option is B)

28.

When wages payable of December $4,320 are paid in January, following entry will be made:

Date Account title Debit Credit
Wages payable 4,320
Cash 4,320

Hence, correct option is (A)

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