Question

Gamma Company adjusts its accounts at the end of each month. The following information has been assembled in order to prepare the required adjusting entries at December 31: (1) A one-year bank loan of $720,000 at an annual interest rate of 6% had been obtained on December 1. (2) The company's pays all employees up-to-date each Friday. Since December 31 fell on Tuesday, there was a liability to employees at December 31 for two day's pay. Employees earn a total of $12,800 per week (3) On December 1, rent on the office building had been paid for three months. The monthly rent is $7,000 (4) Depreciation of office equipment is based on an estimated useful life of five years. The balance in the Office Equipment account is $12,360; no change has occurred in the account during the year. (5) All fees totaling $19,800 were earned during the month 19. Refer to the information above. How much is owed the employees for their wages? A. $0 B. $2,560 C. $5,120 D. $12,800

Answer 1

Answer:C.$5120

In 5 days working week the employees have worked for 2 days on month end as december 31 fell on a Tuesday .So the salary will accrued only for those 2 days,

Salary per week = $12800

Days in week = 5

Days worked = 2

Accrued salary = 12800 x 2/5 = $5120