Ruel Records' weekly payroll of $500 is paid on Fridays. Assume that the last day of the month falls on Tuesday. Which of the following adjusting journal entries is needed on that date?

Question

Quizplus · Accepted Answer

Since the last day of the month falls on a Tuesday and the weekly payroll is paid on Fridays, there are two days of payroll (Wednesday and Thursday) that have not been paid yet. Therefore, an adjusting entry is needed to recognize the expense for those two days that have been earned but not yet paid. Choice C recognizes the salaries expense for those two days (2/5 * $500 = $200) while also accruing the liability for the unpaid portion.

Ruel Records' Weekly Payroll of $500 Is Paid on Fridays