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20 July, 00:28

Windy Harbor Boat Company pays its employees on a weekly basis each Friday. During the week ended Friday, January 3, Year 2, the company had a weekly payroll of $125,750. Assuming that the company is on a calendar basis, has a five-day workweek, and that daily wages are always the same, what adjusting journal entry (if any) would be made on December 31, Year 1?

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  1. 20 July, 00:30
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    Following adjusting journal entry is made on December 31, Year 1.

    Dr. Cr.

    Salaries and Wages Expense $50,300

    Salaries and Wages accrued Payable $50,300

    Explanation:

    Assuming there is 5 working days in the week and company pay for these only.

    Per week Payment = $125,750

    per day payment = 125750 / 5 = $25,150

    Days Lies in Year 2 = January 3, Year 2 - December 31, Year 1 = 3 days

    Days Lies in Year 1 = 5 - 3 = 2 days

    Salaries and Wages accrued on December 31, Year 1 = $25,150 x 2

    Salaries and Wages accrued on December 31, Year 1 = $50,300
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