10SE_3 - Horngren'S Financial And Managerial Accounting

Question

Question :Birch Park Senior Center has a weekly payroll of \(12,500. December 31 falls on Wednesday, and Birch Park Senior Center will pay its employees the following Monday (January 5) for the previous full week. Assume Birch Park Senior Center has a five-day workweek and has an unadjusted balance in Salaries Expense of \)620,000. Requirements 1. Record the adjusting entry for accrued salaries on December 31. 2. Post the adjusting entry to the accounts involved, and show their balances after adjustments. 3. Record the journal entry for payment of salaries made on January 5

Step-by-Step Solution

Answer

Adjusting entry is as follows:

	Journal entry
Date	Accounts and Explanation	Debit	Credit
Jan.5	Salaries Expense	$5,000
	Salaries Payable	$7,500
	Cash		$12,500
	To record payment of salaries expense.

Step-by-Step-Solution Step1: Explanation on Journal Entry

The payment of salaries expense will be recorded by debiting Salaries Expenseby $5,000, salaries payable by $7,500 and crediting cashby $12,500, respectively.

Step 2: Calculation of Salaries Expense

Salaries expense is calculated as follows:

$$\begin{gathered} \mathbf{SalariesExpense}\mathbf{=}\mathbf{PayrollWeeklyExpense}\mathbf{\times }\frac{\mathbf{NumberofDaysExpired}}{\mathbf{NumberofDaysinPayroll}} \\ \mathbf{=}\mathbf{\$}\mathbf{12}\mathbf{,}\mathbf{500}\mathbf{\times }\frac{\mathbf{2}}{\mathbf{5}} \\ \mathbf{=}\mathbf{\$}\mathbf{5000} \end{gathered}$$