A business pays each of its two office employees each Friday at the rate of $60 per day for a five-day week that begins on Monday. If the accounting period ends on Tuesday and the employees worked on both Monday and Tuesday, the adjusting entry to record the salaries earned but unpaid is:
A)Debit Office Salaries Expense $120 and credit Salaries Payable $120.
B)Debit Office Salaries Expense $240 and credit Salaries Payable $240.
C)Debit Salaries Expense $240 and credit Cash $240.
D)Debit Unpaid Salaries $120 and credit Salaries Payable $120.
E)Debit Salaries Payable $240 and credit Office Salaries Expense $240.

Question

Quizplus · Accepted Answer

The employees worked on Monday and Tuesday, so they earned a total of $120 each ($60/day x 2 days). Since the accounting period ends on Tuesday and the business pays its employees each Friday, the salaries earned but unpaid as of the end of the accounting period are $240 ($120/employee x 2 employees). This amount needs to be recorded as an adjusting entry. The debit should be to Office Salaries Expense for $240 (the total amount earned but unpaid) and the credit should be to Salaries Payable for $240 (the amount owed to the employees). Therefore, the correct answer is B: Debit Office Salaries Expense $240 and credit Salaries Payable $240.

A Business Pays Each of Its Two Office Employees Each