Final answer:
The adjusting entry for Molly Mocha's coffee shop on July 31 is to debit Salaries Expense for $800 and credit Accrued Salaries Payable for $800 to account for the college student's unpaid salary for the last four days of July.
Step-by-step explanation:
When Molly Mocha's coffee shop adjusts its books monthly to account for unpaid salaries, she needs to record the accrued salaries expense for July for the student who has worked from Monday, July 28, through Friday, August 1. Since the student earns $200 per day and the payment is due on the following Monday which is not in July, an adjusting journal entry is necessary to reflect this expense in the month it was incurred.
The student worked for 4 days during the month of July (July 28, 29, 30, and 31). Hence, the accrued salaries expense that must be recognized in July's books would be 4 days multiplied by $200 per day, equaling $800.
Therefore, the adjusting entry on July 31 will be to debit Salaries Expense for $800 and credit Accrued Salaries Payable (a liability account) for $800.
The entry will look like this:
- Debit Salaries Expense: $800
- Credit Accrued Salaries Payable: $800