Question

The employees of neat clothes work monday through friday every other friday the company issues payroll checks totaling 36,000. The current pay period ends on Friday, July 3. Neat Clothes is now preparing quarterly financial statements for the three months ended June 30. What is the adjusting entry to record accrued salaries at the end of June?

Salaries expense 22,400
Salaries payable 22,400
Amount accrued: $32,000 x 7/10 = $22,400
1. Can you explain how did we get 22,400?
2. Why we divide 7 over 10? What does 7 mean and what does 10 represent?

Answer 1

Neat Clothes

1. Can you explain how did we get 22,400?

The total wages for 2 weeks or 10 days (5 days each) is $32,000. For the weeks under review, only 7 days are worked in June, the remaining 3 days are in July. To calculate June salaries alone the $32,000 is divided by 10 days, to get the wages per day, and then multiplied by 7 days for the seven days in June.

2. Why we divide 7 over 10? What does 7 mean and what does 10 represent?

The 7 means the days of work done in June and 10 represents the 2 weeks for which wages are being calculated.

So, dividing 7 over 10 gives the proportion of June salaries from the total of $32,000.

Step-by-step explanation:

As above.