Question

A business pays weekly salaries of $20,000 on Friday for a five-day week ending on that day. The adjusting entry necessary at the end of the fiscal period ending on Tuesday is

A. debit Salaries Payable, $8,000; credit Cash, $8,000
B. debit Salary Expense, $8,000; credit Drawing, $8,000
C. debit Salary Expense, $8,000; credit Salaries Payable, $8,000
D. debit Drawing, $8,000; credit Cash, $8,000

Answer 1

C. debit Salary Expense, $8000; credit Salaries Payable, $8000

Step-by-step explanation:

When Salaries are payable or accrued, the following journal entry is passed:

Salaries Expense A/C Dr.

To Salaries Payable A/C

(Being salaries payable recorded)

The effect of the above transaction being, salary expense being debited and salaries payable or outstanding liability being created.

On the date of payment, the journal entry would be:

Salaries Payable A/C Dr.

To Cash A/C

(Being salaries paid in cash recorded)

In the given case, 2 days salaries i.e $8000 have accrued. The entry to be passed on Tuesday would be as under:

Salaries Expense A/C Dr. $8000

To Salaries Payable A/C $8000

(Being salaries payable recorded)