Question

Pablo Management has two part-time employees, each of whom earns $220 per day. They are paid on Fridays for work completed Monday through Friday of the same week. Near year-end, the two 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.

Answer 1

See the explanation.

Step-by-step explanation:

Requirement 1

Adjusting entry for wages expenses

Wages expense debit $440 (Note 1)

Wages payable credit $440

Note 1:

Calculation: Two employees wages = $220 × 2 = $440

As the employees did not receive the wages until Friday and December 31 was Monday, the year ending liability was only for one day. They would receive the wages next Friday, which is in the next year.

Requirement 2

The journal entry to record payment of the employees' wages on Friday, January 4 -

Wages expense debit $1,760 (Note 2)

Cash credit $1,760

Note 2: Two employees wages for 4 days = $220 × 2 × 4 days = $1,760

As January 1 (New years day) was unpaid holly day, the employees did not receive January 1 date's wages, which is $440. As cash paid on January 4, cash became credit.

Answer 2

Step-by-step explanation:

The journal entries are as follows

1. Wages Expense Dr $440

To Wages payable $440

(Being the wages expense is recorded)

It is computed below:

= $220 × 2 employees

= $440

2. Wages payable $440

Wages expense $1,320

To Cash $1,760

(Being payment is recorded)

It is computed below:

= $220 × 2 employees × 4 days

= $1,760

And, the wages expense is

= $1,760 - $440

= $1,320