Question

Problem 3-Adjusting and Reversing Entries Employees at Wallstrom Company are paid every Friday for the five-day week ending on that day. Salaries amount to $5,000 per wook. December 31 is a Wednesday, Instructions a Prepare the necessary adjusting entry at December 31, 2020. b. If the company chooses to use reversing entries, on what date would it make the entry and what is the journal entry? c. Assuming that the company made the reversing entry in (b), what would be the journal entry on Friday, January 2 for payroll? d. Assuming that the company opts not to use reversing entries, what would be the journal entry on January 2 for payroll?

Answer 1

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A B с D E F 1 2 Sr.No a) 3 4 5 6 Date Account title Debit Credit 31-Dec Salaries/Wages Expense a/c Dr 3000 To Salaries/Wages Payable a/c 3000 (Adjusting entry for wages payable) 5 7 b) 1-Jan 3000 8 9 Reversal Entry should pass on Jan-01 Salaries/Wages Payable a/c Dr To Salaries/Wages Expense a/c (Reversal of previous adjusting Entry) 3000 10 11 12 c) 2-Jan 13 Salaries/Wages Expense a/c Dr 5000 To Cash a/c (Entry for payment of Salaries/Wages) 5000 14 15 16 d) 2-Jan 2000 17 Salaries/Wages Expense a/c Dr Salaries/Wages Payable a/c Dr 3000 To Cash a/c (Entry for payment of Salaries/Wages) 18 5000 19 20 21 22