The company pays its employees at the end of the day Friday for work done during
ID: 2502875 • Letter: T
Question
The company pays its employees at the end of the day Friday for work done during that five-day work-week. Total wages for a week are $16,000. In the current year, December 31 occurred on a Tuesday.
a. Make the adjusting entry necessary on the company
The company pays its employees at the end of the day Friday for work done during that five-day work-week. Total wages for a week are $16,000. In the current year, December 31 occurred on a Tuesday. Make the adjusting entry necessary on the company's books on December 31 with respect to unpaid employee wages. Make the journal entry necessary on Friday, January 3, of the following year to record the cash payment of wages for the week. Ignore the New Year's holiday season and assume that employees worked each of the five days. Note: When making this entry, don't forget the adjusting entry that was made on December 31.Explanation / Answer
a. Wehave 2 days till Dec 31 ie Mon & tue
So 2 day wages = 16000*(2/5) = $6,400
Balance 3 days wages = 16000-$6,400 = $9,600
Dec 31 Wages exepense Dr 6400
Wages payable Cr 6400
b. Jan 3 Wages Expense Dr 9600
Wages Payable Dr 6400
Cash Cr 16,000