Question

Use the following information for question 4 & 5. Beard's Bagels has 6 employees who are paid $12 per hour. At December 31, 2011, each of Beard's Bagels employees had worked 18 hours which had not been paid or recorded. Prior to adjustments, the company's trial balance showed $85,700 in the wages expense account. 4. If Beard's Bagels makes the appropriate adjusting entry, how much will be reported on the December 31, 2011 income statement as wage expense? A) $85,700 B) $84,404 C) $ 1,296 D) $86,996

Answer 1

4.

Answer: C

This would be the amount by the product of number of employees, rate per hour, and hours worked per employee.

Amount = Number of employees × Rate per hour × Hours worked per employee

                        = 6 × $12 × 18

                        = $1,296

5.

Answer: B

Adjusting Entry on 31^st Dec.: Wages expense (debit) of $1,296, and Wages payable (credit) of $1,296; both increases.

Payment on January, next year: Wages payable (debit) of $1,296, and Cash (credit) of $1,296; both decreases.

Therefore, wages payable decreases here.