Hugh Morris Company pays weekly wages of $15,000 every Friday for a five day week ending on that day. If the last day of the year is on Tuesday, the adjusting entry to record the accrued wages is:

Question

Quizplus · Accepted Answer

Since the last day of the year is on Tuesday, it means that the employees worked for only three days in that week (Wednesday, Thursday, and Friday). Therefore, the accrued wages for the two unworked days (Saturday and Sunday) and the New Year's Day (which falls on Wednesday) should be recorded as an adjusting entry.

To record the adjusting entry, we need to debit Wages Expense (an income statement account) to recognize the expense for the three days worked in the current year, and credit Wages Payable (a liability account) to reflect the amount owed to the employees for the two unworked days and the New Year's Day.

The amount of wages paid every week is not relevant to this adjusting entry, as we are only concerned with the wages earned but not yet paid as of the end of the year. Therefore, options A and B are incorrect. Option C is also incorrect since Drawing is not a valid account for recording accrued wages.

Hugh Morris Company Pays Weekly Wages of $15,000 Every Friday