The employees of Solo Company employees worked during April but are not paid their wages totaling $500 until May.Which of the following best indicates how to account for this transaction in April?
A) No journal entry needs to be made because payment has not yet been made.
B) A journal entry with a debit to Salaries and Wages Expense and a credit to Unearned Expense for $500 should be recorded.
C) A journal entry with a debit to Salaries and Wages Payable and a credit to Salaries and Wages Expense for $500 should be recorded.
D) A journal entry with a debit to Salaries and Wages Expense and a credit to Salaries and Wages Payable for $500 should be recorded.

Question

Quizplus · Accepted Answer

The entry should reflect the liability that the company owes to its employees for the wages earned in April. Therefore, a journal entry with a debit to Salaries and Wages Expense and a credit to Salaries and Wages Payable for $500 should be recorded in April. This will properly reflect the liability owed by the company for the month of April. Option A is incorrect because a journal entry is required in the current period to reflect the wages earned. Option B is incorrect because Unearned Expense is a balance sheet account and should not be used to record wages. Option C is incorrect because Salaries and Wages Payable is a liability account and should be credited to reflect the company's obligation to pay the employees in May.

The Employees of Solo Company Employees Worked During April but Are