A business pays weekly salaries of $25,000 on Friday for a five-day week ending on that day.The adjusting entry necessary at the end of the fiscal period ending on a Thursday is

Question

Quizplus · Accepted Answer

Since the fiscal period ends on Thursday and the salaries are paid on Friday, there is one day of unpaid salaries that must be accrued. Therefore, the adjusting entry necessary is to debit Salaries Expense for the amount of one day's worth of salaries ($20,000) and credit Salaries Payable for the same amount ($20,000). Option C correctly shows this adjusting entry. Option A is incorrect because it debits Salaries Payable instead of Salaries Expense, which would understate the amount of expense for the period. Option B is also incorrect because it only credits Cash, which does not reflect the fact that there is an amount owed to employees. Option D is incorrect because it only records a small amount of the total salaries paid, which is not accurate.

A Business Pays Weekly Salaries of $25,000 on Friday for a Five-Day