Wages expense in the income report is $56,250, with the balance sheet at the end of the year showing accrued wages of $2,000. If there were no accrued wages at the beginning of the period, how much was paid out in cash for wages during the year?

Question

Quizplus · Accepted Answer

The formula for calculating cash paid for wages is:

Cash paid for wages = Wages expense - change in accrued wages

Change in accrued wages = Ending accrued wages - Beginning accrued wages

Since there were no accrued wages at the beginning, the change in accrued wages is simply the ending balance of $2,000. Therefore:

Cash paid for wages = $56,250 - $2,000 = $54,250

So the correct answer is A.

Wages Expense in the Income Report Is $56,250, with the Balance