A company pays an employee $3,000 for a five-day workweek, Monday-Friday. The adjusting entry on December 31, which is a Wednesday, is a debit to Wages Expense of $1,800, and a credit to Wages Payable of $1,800.

Question

Quizplus · Accepted Answer

This is a correct adjusting entry for the situation described. Since the employee is paid on a weekly basis, the total wages earned for the entire workweek (5 days) are $3,000. However, since December 31 is a Wednesday, the employee has only worked 3 days that week. Therefore, the amount of wages earned through December 31 is calculated as (3/5) x $3,000 = $1,800. This amount is debited to Wages Expense to recognize the cost of the labor used in December, and credited to Wages Payable to recognize the liability to pay the remaining wages on the next payday.

A Company Pays an Employee $3,000 for a Five-Day Workweek