Grant Limited pays all salaried employees on a biweekly basis.Overtime pay, however, is paid in the next biweekly period.Grant accrues salaries expense only at its December 31 year end.Data relating to salaries earned in December 2017 are as follows:
Last payroll was paid on Dec 27, 2017, for the two-week period ended Dec 27, 2017.
Overtime pay earned in the two-week period ended Dec 27, 2017 was $7,000.
Remaining work days in 2017 were December 28, 29, 30, on which days there was no overtime.
The regular biweekly salaries total $100,000.Assuming a five-day work week, Grant should record a liability at December 31, 2017 for accrued salaries of

Question

Quizplus · Accepted Answer

The regular biweekly salaries total $100,000 which means that each biweekly payroll is $50,000. The last payroll for the two-week period ended on December 27, 2017, which means that the last two remaining work days in 2017 are not included in that payroll.

Therefore, the regular biweekly salaries earned in the two remaining work days in 2017 are $100,000 / 10 days = $10,000 per day x 2 days = $20,000.

In addition, there was overtime pay earned in the two-week period ended Dec 27, 2017 was $7,000 which will be paid in the next biweekly period.

Thus, the accrued salaries at December 31, 2017 are as follows:

Regular biweekly salaries earned in the two remaining work days in 2017: $20,000.

Overtime pay earned in the two-week period ended Dec 27, 2017: $7,000.

Total accrued salaries at December 31, 2017: $20,000 + $7,000 = $27,000.

Therefore, the best choice is C) $37,000.

Grant Limited Pays All Salaried Employees on a Biweekly Basis