A manufacturing company's weekly payroll is $80,000 for a 5-day work week beginning each Monday and ending each Friday. The last time salaries and wages were recorded was Friday, December 26. What adjustment is needed on December 31, the last day of the company's fiscal period?

Question

Quizplus · Accepted Answer

The adjustment needed is to increase wages expense by $48,000 to account for the wages earned by employees from Monday, December 29, through Wednesday, December 31 (3 days out of the 5-day work week), which amounts to 3/5 of the weekly payroll ($80,000 * 3/5 = $48,000). This ensures that the expenses are recognized in the period they are incurred, aligning with the accrual basis of accounting.

A Manufacturing Company's Weekly Payroll Is $80,000 for a 5-Day