Question

Sheridan Company pays all salaried employees on a biweekly basis. Overtime pay, however, is paid in the next biweekly period. Sheridan accrues salaries expense only at its December 31 year end. Data relating to salaries earned in December 2020 are as follows: Last payroll was paid on 12/26/20, for the 2-week period ended 12/26/20. Overtime pay earned in the 2-week period ended 12/26/20 was $24000. Remaining work days in 2020 were December 29, 30, 31, on which days there was no overtime. The recurring biweekly salaries total $444000.
Assuming a five-day workweek, Sheridan should record a liability at December 31, 2020 for accrued salaries of:_________.
a. $266400
b. $290400
c. $133200
d. $157200

Answer 1

Answer:

d. $157,200

Explanation:

Calculation for the amount that Sheridan should record a liability at December 31, 2020 for accrued salaries

Liability for accrued salary=$24,000 + ($444,000 ÷ 10 days × 3)

Liability for accrued salary=$24,000+$133,200

Liability for accrued salary= $157,200

Therefore the amount that Sheridan should record a liability at December 31, 2020 for accrued salaries will be $157,200