Question

QUESTION 33 Emory Co. operates five days per week with a daily payroll of $4,000. Employees are paid every Saturday for the workweek just completed (Monday through Friday). The last day of the month is Wednesday, March 31. What is the effect of the correct adjustment at March 31? a. Increases Stockholders' Equity and Wages Payable by $8,000 O b. Increases Wages Payable and increases Wages Expense by $8,000 c. Increases Wages Payable and decreases Cash by $12,000 d. Decreases Stockholders' Equity and increases Wages Payable by $12,000

Answer 1

The answer is : d) Decreases Stockholders' Equity and Increases Wages Payable by $ 12000

Reason: 3 days wages need to be accrued , because it is not paid at the end of the month March 31

That is Monday, Tuesday, Wedsenday = $ 4000*3 = $ 12000

As a Result Journal Entries is as followes:

Debit Credit

Wages Expenses $ 12000

Wages Payable $ 12000

As a result of Wages Expenses Decreases of Net Income and Equity