Karl Company accrued wages of $7,350 that were earned by employees unpaid at the year-end.Assuming Karl 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 accrued wages entry from the previous period. The original entry would have been a debit to Wages Expense and a credit to Wages Payable. Therefore, the reversing entry should be the opposite, which is a debit to Wages Payable and a credit to Wages Expense. The other options do not reverse the original entry correctly.

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