Question

Buster Industries pays weekly salaries of $30,900 on Friday for a five-day week ending on that day. The adjusting entry necessary at the end of the fiscal period ending on Tuesday is
a. debit Salaries Payable, $12,360; credit Cash, $12,360
b. debit Drawing, $12,360; credit Cash, $12,360
c. debit Salary Expense, $12,360; credit Salaries Payable, $12,360
d. debit Salary Expense, $12,360; credit Drawing, $12,360

Answer 1

Answer:

c. debit Salary Expense, $12,360; credit Salaries Payable, $12,360

Explanation:

If the fiscal week ends on Tuesday but payment will be made on Friday,

Amount to be accrued for

= (2/5) × 30,900

=  $12,360

To accrue for this,

Debit Salary Expense      $12,360

Credit Salaries Payable   $12,360

Being entries to record salaries earned by employees yet to be paid

The right answer is c. debit Salary Expense, $12,360; credit Salaries Payable, $12,360.