Question

Exercise 3-2 Adjusting and paying accrued wages LO P3 Pablo Management has seven employees, each of whom earns $225 per day. They are paid on Fridays for work completed Monday through Friday of the same week. Near year-end, the seven employees worked Monday, December 31, and Wednesday through Friday, January 23, and 4. New Year's Day (January 1) was an unpaid holiday Prepare the year-end adjusting entry for wages expense and record payment of the employees' wages on Friday, January 4. View transaction list Journal entry worksheet < 1 2 Record the year-end adjusting entry for wages expense. Note: Enter debits before credits General Journal Debit Credit Date December 31

Answer 1

Journal entries.

Date	Accounts	Debit	Credit
Dec 31	Wages expense	$ 1,575
	To wages payable		$ 1,575
	( accruing wages expense of one day for 7 employees)

Wages for one day for 7 employees = 7 x 225

Wages for one day for 7 employees = $ 1,575.

The payment is made on January 4 of next year. But on January 1, it is holiday and so no payment to be made. So Wednesday, Thursday and Fridays expense to be recognized as expense in new year.

Date	Accounts	Debit	Credit
Jan 4	Wages expense	$ 4,725
	Wages payable	$ 1,575
	To Cash		$ 6,300
	( payment of wages)

3 days wages = 225 x 3 x 7

3 days Wages = 4,725.

SUMMARY:

On payment date, a total of 4 days payment is made but 3 days expense to be recognized in new year and one day expense in last year.