Question

Assume that Best Buy made a December 31 adjusting entry to debit Salaries Expense and credit Salaries Payable for $4,200 for one of its departments. On January 2, Best Buy paid the weekly payroll of $7,000. Prepare Best Buy's (a) January 1 reversing entry; (b) January 2 entry (assuming the reversing entry was prepared); and (c) January 2 entry (assuming the reversing entry was not prepared).

Answer 1

Answer:

salaries payable              4,200 debit

         salaries expense                    4,200 credit

----- reversing entry -----

salaries expense            7,000 debit

         cash                                        7,000 credit

----payment of wages7wtih reserving entry----

salaries payable               4,200 debit

salaries expense            2,800 debit

         cash                                        7,000 credit

---- payment without reversingentry ----

Explanation:

(A) the reversal entry will be like the adjusting entry done backwards.

(B) when the journal entry is made, then we recognize expense for the full amount. leaving a balance for the expense for the current period:

wages expense

debit       credit

              4,200

7,000

2,800 debit balance

(C) if no reversing entry was made, then we use the payable and recognize expense for the period

7,000 - 4,200 = 2,800 expense