Question

Dude Duds, Inc. is a clothing retailer specializing in affordable family apparel. Prepare journal entries and related adjusting entries (if any) for the transaction below for the first quarter ending March 31 of the current year. Employees earned $2,779,283 in salaries and wages during this quarter, of which the company paid $2,084,462. Select one: O a. Dr. Salaries and wages expense $2,779,283; Cr. Cash $2,084,462; Cr. Salaries and wages payable $694,821 O b. Dr. Salaries and wages expense $2,779,283; Cr. Cash $2,779,283 c. Dr. Salaries and wages expense $2,779,283; Cr. Salaries and wages payable $2,779,283 d. No journal entry or adjusting needed O e. Dr. Cash $2,084,462; Dr. Salaries and wages payable $694,821; Dr. Salaries and wages expense $2,779,283

Answer 1

Answer is as follows:

Correct Option : a

Entry: Salaries and Wages expense a/c Dr $2,779,283

To Cash a/c $2,084,462

To Salaries and wages payable a/c $ 694,821

The expenses relating to this quarter must be expensed fully to Profit & Loss a/c(debited) and Salaries and wages payable must be credited as it is a current liability to be shown in balance sheet and paid amount is reduced from cash by crediting the Cash a/c.