Major Ltd has a weekly payroll of $30,000.Its employees work a 5-day week (Monday to Friday)and are paid on Thursdays in arrears (i.e.,for the five days up to,and including,the Thursday).Pay-as-you-go tax on the weekly payroll is $10,000 and this is paid to the Australian Tax Office on the following Monday.Deductions of $1,000 are also made on behalf of employees to pay into a medical benefits fund.The year ended 30 June 2004 falls on a Wednesday.What is the accounting entry to record accrued salaries and wages for this period?
E) None of the given answers.

Question

Quizplus · Accepted Answer

Accrued salaries and wages for the period should include the salaries earned but not paid for the days from Friday to Wednesday ($30,000/5)*2 = $12,000. In addition, the PAYG tax withheld of $10,000 and the medical benefits fund deduction of $1,000 should also be included. Therefore, the total accrued salaries and wages for the period is $23,000. This should be recorded with the following journal entry:
Dr. Salaries and wages expense $23,000
Cr. Accrued salaries and wages $23,000

Major Ltd Has a Weekly Payroll of $30,000