Question

Atlen Company has one employee named Mr. Hatfield who earns $100 per day. Mr. Hatfield works Monday through Friday and is paid every Friday for the week ending on that day. December 31, 2015 falls on a Wednesday. A) What adjusting entry does Atlen Company need to make on December 31, 2015? Cr B) How does this transaction affect the following items? Net income Retained Earnings Total Assets Total Liabilities Total Equity: C) What journal entry does Atlen Company make on the first fFriday in 2016? does Atlen Company make on the first Friday in 20167 Cr D) How does this transaction affect the following items? Net Income Retained Earnings Total Assets Total Liabilities Total Equity

Answer 1

A)

Journal

Date	Account title	Debit	Credit
Dec. 31, 2015	Salaries expense	300
	Salaries payable		300

B)

Net income	Decrease by $300
Retained earnings	Decrease by $300
Total assets	No effect
Total liabilities	Increase by $300
Total equity	Decrease by $300

C)

Journal

Date	Account title	Debit	Credit
Jan.2, 2016	Salaries expense	200
	Salaries payable	300
	Cash		500

D)

Net income	Decrease by $200
Retained earnings	Decrease by $200
Total assets	Decrease by $500
Total liabilities	Decrease by $300
Total equity	Decrease by $200

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