Proctor Inc.has a weekly payroll of $8,000 for a 5-day workweek, Monday through Friday.If December 31, the last day of the accounting year, falls on Wednesday, Proctor would make an adjusting entry that would
A) increase wages expense $4,800.
B) decrease wages payable $4,800.
C) decrease cash $4,800.
D) increase wages payable $8,000.

Question

Quizplus · Accepted Answer

The correct adjusting entry for Proctor Inc. would be to recognize the wages expense incurred but not yet paid for the three days of the workweek that have passed (Monday through Wednesday). Since the weekly payroll is $8,000 for a 5-day workweek, the daily payroll is $1,600 ($8,000 / 5). For three days, this amounts to $4,800 ($1,600 x 3), which should be recognized as an additional wages expense to accurately reflect the costs incurred during the year. This adjustment does not involve decreasing cash or wages payable directly but rather increases the wages expense to account for the accrued wages.