The Snow Drift ski resort pays its salaried staff $50,000 for 10 days work (Monday - Friday) every two weeks. The resort's financial year end falls 5 working days into its fortnightly salary payment cycle. The adjusting entry that it needs to make in connection with wages is:

Question

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The adjusting entry needed in this case is to recognize the wages earned by the employees but not yet paid at the end of the financial period. Since the staff is paid every two weeks and the year-end falls 5 working days into the salary payment cycle, the resort owes 5 days' salary to its staff.

To record this adjustment, the resort will need to debit Wage Expense (an income statement account) for $25,000 and credit Wages Accrued (a balance sheet account) for $25,000. This will increase the expenses and decrease the current liabilities at the year-end. Choice C is the best option that correctly records this adjustment.

The Snow Drift Ski Resort Pays Its Salaried Staff $50,000