The following balances have been excerpted from Edwards' balance sheets:

Edwards Company paid or collected during 2011 the following items:

The salary expense on the income statement for 2011 was
A) $366,500.
B) $472,500.
C) $489,500.
D) $595,500.

Question

The following balances have been excerpted from Edwards' balance sheets:

Edwards Company paid or collected during 2011 the following items:

The salary expense on the income statement for 2011 was
A) $366,500. 
B) $472,500. 
C) $489,500. 
D) $595,500.

Quizplus · Accepted Answer

To determine the salary expense for 2011, we need to look at the change in the salaries payable account. From the balance sheet, we know that salaries payable increased from $23,000 at the beginning of the year to $36,000 at the end of the year, for an increase of $13,000. This means that Edwards Company accrued $13,000 in salaries expense during the year (since this amount was owed but not yet paid at year-end).

Next, we need to add the actual cash paid for salaries during the year. From the cash flow statement, we can see that $476,500 was paid for salaries and wages. Adding this amount to the $13,000 in accrued salary expense gives us a total salary expense of $489,500.

Therefore, the correct answer is C) $489,500.

The Following Balances Have Been Excerpted from Edwards' Balance Sheets