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Chapter 3: 10SE_3 (page 159)

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

Short Answer

Expert verified

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

01

Step-by-Step-SolutionStep1: 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.

02

Calculation of Salaries Expense

Salaries expense is calculated as follows:

SalariesExpense=PayrollWeeklyExpense×NumberofDaysExpiredNumberofDaysinPayroll=$12,500×25=$5000

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Most popular questions from this chapter

Refer to the data in Exercise E3-25, and prepare an adjusted trial balance.

Which accounting concept or principle requires companies to divide their activities into small time segments such as months, quarters, or years?

Question :Chef ’s Catering completed the following selected transactions during May 2018: Learning Objectives 1, 2 Learning Objectives 1, 2 > Exercises May 1 Prepaid rent for three months, \(2,400. 5 Received and paid electricity bill, \)700. 9 Received cash for meals served to customers, \(2,600. 14 Paid cash for kitchen equipment, \)3,000. 23 Served a banquet on account, \(2,800. 31 Made the adjusting entry for rent (from May 1). 31 Accrued salary expense, \)1,600. 31 Recorded depreciation for May on kitchen equipment, \(50. Date May 1 \)(2,400) $0 Cash Basis Amount of Revenue (Expense) Accrual Basis Amount of Revenue (Expense) Amount of Revenue (Expense) for May Requirements 1. Show whether each transaction would be handled as a revenue or an expense using both the cash basis and accrual basis accounting systems by completing the following table. (Expenses should be shown in parentheses.) Also, indicate the dollar amount of the revenue or expense. The May 1 transaction has been completed as an example. 2. After completing the table, calculate the amount of net income or net loss for Chef ’s Catering under the accrual basis and cash basis accounting systems for May. 3. Considering your results from Requirement 2, which method gives the best picture of the true earnings of Chef ’s Catering? Why?

Iron Horse Printing Services purchased \(1,000 of printing supplies for cash, recording the transaction using the alternative treatment for deferred expenses. At the end of the year, Iron Horse had \)300 of printing supplies remaining. Record the journal entry for the purchase of printing supplies and the adjusting entry for printing supplies not used.

When is an adjusted trial balance prepared, and what is its purpose?
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