Question

Cook Builders pays its workers every two weeks. As of December 31 of Year 1, workers have earned wages of $9,000 for which they have not yet been paid; they will not be paid these wages until January of next year. The correct adjusting entry was made. On January 5 of Year 2, Cook Builders paid total wages to the employees of $13,000, of which $9,000 related to work performed last year. Which one of the following is included in the journal entry necessary on January 5 of Year 2 to record the payment of $13,000 in cash?

A. debit wage expense $13,000
B. debit wages payable $4,000
C. debit wage expense $9,000
D. credit wages payable $9,000
E. debit wage expense $4,000

Answer 1

Answer: E Debit wage expense $4,000

Explanation:Cook Builders has in its books $9,000 wage payable as at 31st Dec year 1. On 5th Jan year 2, it paid the wage payable of $9,000 for year 1 plus $4,000 for the current year.

This makes the $4,000 a current year expenses on wages.

the Entries to the above is stated below as:

Credit Bank with $13,000 as cash is paid from the bank

Debit wage payable with $9,000 as outstanding wages for year 1

Debit wage expense with $4,000 as current week wage payment