Question

Rice Company's salaried employees are paid twice monthly. Information relating to salaries follows:

December 31, 2013 December 31, 2014
Accrued Salaries Payable $40,000 ?
Salary Expense during 2014 420,000
Cash paid for Salaries during 2014 390,000

In Rice's December 31, 2014 balance sheet, the ending balance that should be reported for accrued salaries payable is:

A. $10,000

B. $30,000

C. $40,000

D. $70,000

Answer 1

The correct option is B. To find the ending balance of accrued salaries payable, subtract the cash paid from the accumulated salary expense during the year. In this case, the ending balance is $30,000.

Step-by-step explanation:

To determine the ending balance of accrued salaries payable, we need to consider the changes that occurred during the year. The beginning balance of accrued salaries payable was $40,000, and the salary expense during 2014 was $420,000.

This means that $420,000 of salaries were earned by employees during the year but were not yet paid. Additionally, $390,000 in cash was paid for salaries during the year. To find the ending balance, we can subtract the cash paid from the accumulated expense: $420,000 - $390,000 = $30,000.