The Prima Hotel pays its waged staff $28,000 every 7 days. The hotel's year end falls 3 days into its 7 day wage payment cycle. The adjusting entry that it needs to make in connection with wages is:

Question

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The Prima Hotel needs to make an adjusting entry to recognize the wages earned by its staff for the 3 days that fall outside the accounting period. This means that the hotel owes its staff for these 3 days and has an accrued expense. Therefore, the appropriate journal entry is to debit Wage Expense for $12,000 (3/7 of one week's wages) and credit Accrued Wages for the same amount. Option A is incorrect because it suggests a prepaid expense, which is not the case here. Option B is incorrect because it is effectively a double entry to expense the wages (once through accrued wages and once through wage expense). Option D is incorrect because an adjusting entry is required. Option E is incorrect because option C is the correct choice.

The Prima Hotel Pays Its Waged Staff $28,000 Every 7