Michael Myers & Co paid salaries of $150 000 during the year and owes $2200 for three days work carried out before the 31 December 2014 which will not be paid until January 3 2015. After the adjusting entry for the year ended 31 December 2014:
A) salaries in the income statement are $152 200 and accrued salaries in the balance sheet are $2200.
B) salaries in the income statement are $150 000 and accrued salaries in the balance sheet are $2200.
C) salaries in the income statement are $147 800 and accrued salaries in the balance sheet are $2200.
D) salaries in the income statement are $152 200 and accrued salaries in the balance sheet are zero.

Question

Quizplus · Accepted Answer

The correct answer is A because the total salaries expense recognized in the income statement for the year should include both the paid salaries of $150,000 and the accrued salaries of $2,200 for the work done before December 31, 2014, totaling $152,200. The $2,200 is also shown as accrued salaries in the balance sheet, representing an obligation to pay this amount in the future.

Michael Myers & Co Paid Salaries of $150 000 During