A business pays weekly salaries of $20,000 on Friday for a five-day week ending on that day. The adjusting entry necessary at the end of the fiscal period ending on a Thursday is
A) debit Salaries Payable, $16,000; credit Cash, $16,000.
B) debit Salaries Expense, $16,000; credit Cash, $16,000.
C) debit Salaries Expense, $16,000; credit Salaries Payable, $16,000.
D) debit Salaries Expense, $4,000; credit Salaries Payable, $4,000.

Question

Quizplus · Accepted Answer

The adjusting entry is necessary to record the salary expense for the Thursday payroll that will not be paid until Friday. So, we should debit Salaries Expense and credit Salaries Payable for the amount of the salary earned by employees but not yet paid, which is $16,000. Option A is incorrect because we cannot credit Cash for an expense that has not yet been paid. Option B is incorrect because we do not debit Salaries Expense for the full amount of the Friday payroll, only for the Thursday payroll. Option D is incorrect because $4,000 is not the correct amount of the adjusting entry.

A Business Pays Weekly Salaries of $20,000 on Friday for a Five-Day