contestada

A business pays biweekly salaries of $20,000 every other Friday for a ten-day period ending on that day. The last payday of December is Friday, December 27. Assume the next pay period begins on Monday, December 30, and the proper adjusting entry is journalized at the end of the fiscal period (December 31). The entry for the payment of the payroll on Friday, January 10, includes a _______.

Respuesta :

Answer:

Debit Salaries $16,000, Debit Accrued salaries $4,000 and a Credit bank/cash account $20,000

Explanation:

If the company pays biweekly,under the accrual accounting system, expenses are to be recognized in the period incurred and not necessarily in the period of cash payment.

Given that the company pays $20,000 for a 10 day period, in 2 days (30 and 31 December), the company would have incurred salaries amounting to

= 2/10 × $20,000

= $4,000

The entries required to accrue for this will be

Debit Salaries  $4,000

Credit Accrued salaries  $4,000

When payment is made on January 10, the required entries

Debit Salaries $16,000 (being the difference between the $20,000 biweekly payments and the expense initially accrued)

Debit Accrued salaries $4,000

Credit bank/cash account $20,000

Otras preguntas