Question

A company pays each of its two office employees each Friday at the rate of $210 per day for a five-day week that begins on Monday. If the monthly accounting period ends on Tuesday and the employees worked on both Monday and Tuesday, the month-end adjusting entry to record the salaries earned but unpaid is:

Multiple Choice

• Debit Unpaid Salaries $1,260 and credit Salaries Payable $1,260.

• Debit Salaries Expense $840 and credit Cash $840.

• Debit Salaries Expense $840 and credit Salaries Payable $840.

• Debit Salaries Payable $840 and credit Salaries Expense $840.

• Debit Salaries Expense $1,260 and credit Salaries Payable $1,260.

Answer 1

Answer for the question is -

Debit Salaries Expense $840 and credit Salaries Payable $840.

Explanation -

In the given case company has policy to pay salaries on the friday of every week. In the current financial year last day of the year has came on Tuesday.

Hence in the current situation we have to make provision for salaries for 2 days.

Salary Expenses = 2 Employees X $210 per Employees X 2 days = $840

Journal Entry -

Salaries Expense will be debited to income statement for the period as the expense is part of current year and its not paid in the current year salaries payable will be considered as current liabilities which will be paid in the next year..