Question

Adjusting and paying accrued wages LO P1

Pablo Management has five part-time employees, each of whom earns $90 per day. They are paid on Fridays for work completed Monday through Friday of the same week. Near year-end, the five employees worked Monday, December 31, and Wednesday through Friday, January 2, 3, and 4. New Year's Day. (January 1) was an unpaid holiday.
1. Prepare the year-end adjusting entry for wages expenses.
2. Prepare the journal entry to record payment of the employees' wages on Friday, January 4, 2018.

Answer 1

1. Dr Wages expense $450

Cr Wages payable $450

2.Dr Wages expense $1350

Dr Wages payable $450

Cr Cash $1800

Step-by-step explanation:

1. Preparation of the year-end adjusting entry for wages expenses.

Dec 31

Dr Wages expense $450

Cr Wages payable $450

( 5 employees * $90 per day)

(To record wages expenses)

2. Preparation of the journal entry to record payment of the employees' wages on Friday, January 4, 2018

Jan 4

Dr Wages expense $1350

(3 days*5 employees*$90=$1350)

Dr Wages payable $450

(5 employees * $90 per day)

Cr Cash $1800

($1350+$450 =$1800)

(To record payment of the employees' wages)