Question

Pablo Management has four part-time employees, each of whom earns $235 per day. They are paid on Fridays for work completed Monday through Friday of the same week. Near year-end, the four employees worked Monday, December 31, and Wednesday through Friday, January 2, 3, and 4. New Year's Day. (January 1) was an unpaid holiday.

a. Prepare the year-end adjusting entry for wages expenses.
b. Prepare the journal entry to record payment of the employees' wages on Friday, January 4.

Answer 1

1) $940 will be debited to wages account credited to wages payable account

2) $2,820 will be debited to wage expense; $940 to wages payable and $3,760 credited to cash account.

Step-by-step explanation:

Question 1: To prepare the year end adjusting entry for the wages expenses assuming that December 31 was a Monday.

Date Particulars Debit Credit

Dec, 31 Wages Account $940

Wages Payable A/c $940

Being the record of wages accrued for one day.

Note: The $940 is the $235 x 4

Question 2) Prepare the journal entry to record payment of the employees' wages on Friday, January 4.

Step 1) The wages expense would be the wages of the four workers for the will be calculated as follows

The wage expense for the three days in the new year = 4 workers x 3 days x $235= $2,820

The Cash account= 4 workers x 4 days x $235= $3,760

Date Particulars Debit Credit

Jan, 14 Wages Expense $2,820

Wages Payable A/c $940

Cash Account $3,760

Being the record of accrued wages (from step 1) and current wages paid.