Question

DAC Company pays its employees every Friday. On January 2, 20--, the Company paid $6,000 for the 5 days beginning the previous Monday, December 29. Prepare the adjusting entry on December 31. Omit explanations. If an amount box does not require, leave it blank.

Answer 1

Answer:

December 31  Salaries & wages expense       3600 Dr

                             Salaries & wages Payable         3600 Cr

Explanation:

The pay week is of 5 days starting from Monday to Friday. The wage per day is,

wage per day = 6000 / 5  = $1200 per day

The adjusting entry is made based on the accrual or matching principle which follows that the expenses and revenue relating to a particular period should be matched and recorded in their respective periods.

Thus, the wage expense for 3 days ending 31 December will be recorded as wages expense on 31 december for 1200 * 3  = $3600

The credit against this entry will be wages payable as the wage will be paid on January 2.