Question

Jenning Co. adjusts its books each month but closes its books at the end of the year. The trial balance at July 31 before adjustments is as follows:

Debit
Cash $12,920
Accounts Receivable $9,620
Supplies $1,400
Prepaid Insurance $3,120
Equipment $26,000
Credit
Accumulated Depreciation—Equipment $10,400
Unearned Service Revenue $6,500
Capital Stock $7,190
Retained Earnings $23,500

Debit
Dividends $1,560

Credit
Service Revenue $16,510

Debit
Wages and Salaries Expense $7,800
Utilities Expense $380
Rent Expense $1,300

Total Debit: $64,100
Total Credit: $64,100

Refer to the trial balance for Jenning Co.

Employees are owed $750 for services since the last payday in July, to be paid the first week in August. The amount to be reported in the July income statement for salaries expense is:

a. $750
b. $7,800
c. $8,550
d. $7,050

Answer 1

The amount to be reported in the July income statement for salaries expense is $7,800.

Step-by-step explanation:

The amount to be reported in the July income statement for salaries expense is $7,800.

Since the employee's services were performed in July, the associated expense should be recorded in the same month's income statement. The fact that the payment will be made in the first week of August does not affect the timing of recognition for the expense. Therefore, the correct amount to report is the wages and salaries expense of $7,800.