Question

Pablo Management has two employees, each of whom earns $120 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. Prepare the year-end adjusting entry for wages expense and record payment of the employees’ wages on Friday, January 4.

Answer 1

December 31:

To record accrued wages for one day : (2 workers × $120) =$240

January 4:

To record accrued and current wages.

Wages expenses = 2 workers × 3 days × $120 =$720

Cash =2 workers × 4 days ×$120= $960

Balance=$240

1.)December 31

Wages expenses $240

Wages payable $240

2.)January 4 General Journal

Wages payable $240 (Debit)

Wages expenses $720 (Credit)

Cash $960