Pablo Management has five part-time employees, each of whom earns $250 per day. They are paid on Fridays for work completed Monday through Friday of the same week. Near year-end, the five employees worked Monday, December 31, and Wednesday through Friday, January 2, 3, and 4. New Year's Day. (January 1) was an unpaid holiday. 1. Prepare the year-end adjusting entry for wages expenses. 2. Prepare the journal entry to record payment of the employees' wages on Friday, January 4.

Question

Erika

Business

25 July, 14:49

Pablo Management has five part-time employees, each of whom earns $250 per day. They are paid on Fridays for work completed Monday through Friday of the same week. Near year-end, the five employees worked Monday, December 31, and Wednesday through Friday, January 2, 3, and 4. New Year's Day. (January 1) was an unpaid holiday. 1. Prepare the year-end adjusting entry for wages expenses. 2. Prepare the journal entry to record payment of the employees' wages on Friday, January 4.

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Santino Strong · Answer 1

wages expense 1,250 debit

wages payable 1,250 credit

--year-end accrued wages--

wages expense 3,750 debit

wages payable 1,250 debit

cash 5,000 credit

--Jan 4th payment--

Explanation:

At year-end we must match the wages expenses with the period.

December 31 is Monday so we accrued wages for this day only:

5 employees x 250 dollars each = 1,250

Then on Friday we pay for Monday and the other days:

1,250 per day x 4 days = 5,000 cash proceed

we already recognize 1,250

wages expense for the period 3,750

we also need to write-off the payable we determinate on December 31th.