Speedy Company's weekly payroll of $250 is paid on Fridays (five-day work week).Assume that the last day of the month falls on Thursday.Which of the following is the required month-end adjusting entry?

Question

Quizplus · Accepted Answer

The correct adjusting entry is to recognize the expense incurred for the four days of work that occurred in the current month but will be paid in the next month. Since the weekly payroll is $250 for a five-day work week, each day's payroll is $50 ($250/5). For four days (Monday to Thursday), the expense is $200 ($50 x 4 days), so Salaries Expense should be increased by $200, and Salaries Payable should also be increased by $200 to reflect the obligation to pay this amount.

Speedy Company's Weekly Payroll of $250 Is Paid on Fridays