Question

At the end of an accounting period wages expense of $190 000 is closed to the profit and loss summary account. The wages are made up of $180 000 paid in cash and accrued wages of $10 000. A reversing entry is made for accrued wages on the first day of the next accounting period. The first payment to employees for wages in the new year is $25 000. How would this payment be recorded? Select one: O a. Debit accrued wages $10 000: credit bank S10 000 b. Debit wages expense $15 000; debit accrued wages $10 000; credit bank $25 000 c. Debit wages expense $25 000 credit bank $25 000 O d. Debit wages expense S15 000: credit bank S15 000

Answer 1

Accrued wages in the first accounting period = $10,000

At the beginning of the next accounting period, the following reversing entry would be made:

Debit - Accrued wages $10,000, Credit - Wages expense $10,000

Wages paid in the next year = $25,000

Since accrued wages are no more present, hence in the journal entry to make payment for wages expense, accrued wages will not appear.

The following journal entry will be made for the payment of wages:

Debit - Wages expense $25,000, Credit - Bank $25,000

Correct option is (C)

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