Bread Basket provides baking supplies to restaurants and grocery stores. During December 2011, Bread Basket's employees worked 2,400 hours at an average rate of $€ 10$ per hour. At December 31, 2011, Bread Basket has paid $€ 11,000$ of salary expense. If Bread Basket fails to make the appropriate adjusting entry, which of the following is true regarding its December 31,2011 statement of financial position?

Question

Quizplus · Accepted Answer

Bread Basket's total salary expense for December is $€ 24,000$ (2,400 hours x $€ 10$). Since only $€ 11,000$ has been paid, $€ 13,000$ remains unpaid and should be recorded as a liability. If not adjusted, liabilities are understated by $€ 13,000$.

Bread Basket Provides Baking Supplies to Restaurants and Grocery Stores €10€ 10€10

Bread Basket Provides Baking Supplies to Restaurants and Grocery Stores $€ 10$