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Zen Arcade paid the weekly payroll on January 2 by debiting Salaries and Wages Expense for $47,000. The accountant preparing the payroll entry overlooked the fact that Salaries and Wages Expense of $20,000 had been accrued at year end on December 31. The correcting entry is ___

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Answer:

Salaries and wages payable...................Dr $20,000

Salaries and wages expense $20,000

Step-by-step explanation:

As per accrual system, an expense is incurred when it is accrued irrespective of when it is paid. So, $20,000 was accrued in December 31, salary and wages expenses would have been debited then amounting to $20,000.

In order to rectify the mistake of double counting, the entry passed by the accountant would be reversed to nullify the effect.

Adjusting Journal entry:

Particulars Debit Credit

Salaries and wages payable $20,000

Salaries and wages expense $20,000

(Being double counting of salaries and

wages expense rectified)

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