Question

On December 31, 20xx, ABC company needed to record its accrued wages for year-end. If December 31 is a Thursday, then ABC company must account for four days of wages. The Company operates on a five-day workweek, the week's gross pay is $70,000, and the net pay is $42,000. What is the amount of earnings the company would need to record in the adjusting entry to be made on December 31st for the accrued wages?

Answer 1

Answer:

Explanation:

The adjusting entry is shown below:

Salary expense A/c Dr $56,000

         To Salary payable A/c $33,600

         To Deductions payable A/c $22,400

(Being the accrued wages are recorded and the remaining balance is credited to deductions payable account)

The computations are shown below:

For salary expense, it would be

= $70,000 × 4 days ÷ 5 days

= $56,000

For salary payable, it would be

= $42,000  × 4 days ÷ 5 days

= $33,600