During 2014 The Style Hairdressing Salon paid out $41 000 in wages from its bank account. At year-end 2014 wages owing but unpaid were $1600. The salon uses accrual accounting. How much would be reported as wages expense for 2014?

Question

Quizplus · Accepted Answer

Wages expense for 2014 = Wages paid - Wages owing but unpaid
= $41,000 - $1,600
= $39,400
However, since the salon uses accrual accounting, the wages expense should include the amount owing but unpaid at year-end. Therefore, the total wages expense for 2014 would be:
$41,000 + $1,600 = $42,600
Thus, the best choice is D.

During 2014 the Style Hairdressing Salon Paid Out $41 000