Question

The employees of Xitrex, Inc., are paid each Friday. The company’s fiscal year-end is June 30, which falls on a Wednesday for the current year. Salaries are earned evenly throughout the five-day work week, and $10,000 will be paid on Friday, July 2.

Required:
1. Prepare an adjusting entry to record the accrued salaries as of June 30, a reversing entry on July 1, and an entry to record the payment of salaries on July 2.
2. Prepare journal entries to record the accrued salaries as of June 30 and the payment of salaries on July 2 assuming a reversing entry is not recorded.

Answer 1

1. Prepare an adjusting entry to record the accrued salaries as of June 30, a reversing entry on July 1, and an entry to record the payment of salaries on July 2.

June 30, 202x, accrued wages expense

Dr Wages expense 6,000

Cr Wages payable 6,000

July 1, 202x, reversing entry of accrued wages

Dr Wages payable 6,000

Cr Wages expense 6,000

July 2, 202x, wages expense

Dr Wages expense 10,000

Cr Cash 10,000

2. Prepare journal entries to record the accrued salaries as of June 30 and the payment of salaries on July 2 assuming a reversing entry is not recorded.

June 30, 202x, accrued wages expense

Dr Wages expense 6,000

Cr Wages payable 6,000

July 2, 202x, payment of wages

Dr Wages expense 4,000

Dr Wages payable 6,000

Cr Cash 10,000