Question

The employees of Clothes About People (CAP) work Monday through Friday. Every second Friday the company issues payroll totaling $29,000. The next pay period ends on Friday, July 3. CAP is preparing quarterly financial statements for the three months ended June 30. What is the adjusting entry necessary to record accrued salaries at the end of June? Multiple Choice 5,800 Salaries expense Salaries payable 5,800 20,300 Salaries expense Salaries payable 20,300 8,700 Prepaid salaries Salaries payable 8,700 Salaries expense Prepaid salaries 20,300 8,700

Answer 1

Monthly Payroll expense = $29,000

Average daily expense over 10 days = $29,000 / 10 = $2,900

At the end of June 30, only 7 days of salary expense has been accrued

Accrued salary expense at end of June 30 = $2,900 * 7 = $20,300

So, adjusting entry at end of June 30 is

Salary expense account............Debit $20,300

To Salaries payable account...Credit $20,300

So, Answer is

Salaries expense $20,300

Salaries Payable $20,300