Final answer:
To adjust for the Austin Company's wages, depreciation, and office supplies expenses for January, the correct journal entries must be posted. This involves accounting for accrued wages, monthly depreciation, and reduction in office supplies inventory.
Step-by-step explanation:
To address the student's question about the Austin Company's adjusting entries and payroll recording, we'll go through the process step by step.
Payroll Adjusting Entry for January
The company has a daily wage expense of $645 Monday through Friday. Since the last payday was January 21, we need to account for the wages accrued from January 24 to January 31 (assuming January 31 is a weekday). That's six days of wages (January 24, 25, 26, 27, 28, and 31). The adjusting entry on January 31 would be:
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- Debit: Wages Expense $3,870 (6 days * $645)
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- Credit: Wages Payable $3,870
Payroll Journal Entry on February 4
Assuming February 4 is the next payday and the company pays two weeks of wages, the journal entry would be:
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- Debit: Wages Expense $6,450 (10 days * $645)
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- Credit: Cash $6,450
Note that the adjustment made on January 31 for accrued wages will be part of this total payroll expense.
Depreciation Expense Entry for January
To account for depreciation for the month of January, we divide the annual depreciation expense by 12:
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- Debit: Depreciation Expense $3,300 ($39,600 / 12)
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- Credit: Accumulated Depreciation $3,300
Office Supplies Adjustment Entry for January
Given an initial office supplies balance of $3,755 and an ending inventory of $635, the company used $3,120 of supplies in January. The adjusting entry would be:
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- Debit: Office Supplies Expense $3,120
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- Credit: Office Supplies $3,120