Question

Requirement 1. Jounalize the adjusting entry needed on December 31 for each of the items affecting laferty Landscaping. Assume Laferty records adjusting entries only at the end of the year.

Each Friday, Laferty pays employees for the current weeks work. the amount of the weekly payroll is $8,500 for a five-day workweek. This year Decmeber 31 falls on a Thurday. Laferty will pay its enployees on January 1

Answer 1

The adjusting entry needed for Laferty Landscaping on December 31 is to record the accrued payroll expense for the year. The weekly payroll amount is $8,500 for a five-day workweek, and since December 31 falls on a Thursday, an adjusting entry is required to account for the employees' work from Monday to Thursday that has not been paid yet.

Step-by-step explanation:

The adjusting entry needed on December 31 for Laferty Landscaping is to record the accrued payroll expense for the year. Since December 31 falls on a Thursday and Laferty pays its employees on January 1, the employees have worked for four days (Monday to Thursday) but have not been paid yet. The weekly payroll amount is $8,500 for a five-day workweek, so the daily payroll expense can be calculated as $8,500/5 = $1,700. Therefore, the adjusting entry to be made on December 31 is:

Income Statement:
Accrued Payroll Expense = $1,700 x 4 days = $6,800
Balance Sheet:
Accrued Payroll Payable = $6,800