Kline Company accrued wages of $7,350 that were earned by employees unpaid at the year-end.Assuming Kline uses reversing entries,which of the following entries correctly reverses the accrued wages at the beginning of the following year?
A) Debit Wages Expense $7,350; credit Cash $7,350.
B) Debit Wages Expense $7,350; credit Wages Payable $7,350.
C) Debit Wages Payable $7,350; credit Cash $7,350.
D) Debit Cash $7,350; credit Wages Expense $7,350.
E) Debit Wages Payable $7,350; credit Wages Expense $7,350.

Question

Quizplus · Accepted Answer

The reversing entry should reverse the original accrual entry made at the end of the previous period. The original entry was a debit to Wages Expense and a credit to Wages Payable. Therefore, to reverse this entry, we need to debit Wages Payable and credit Wages Expense. Option E is the only option that does this.

Kline Company Accrued Wages of $7,350 That Were Earned by Employees