Classic Artists' Services has hired a maintenance man to maintain a building they use for instruction.He will begin work on 1 February and work through till 31 May.Classic Artists' will pay the maintenance man $16,000 at the end of May.It accrues Maintenance expense at the end of every month.What is the balance in the Accounts payable account for amounts owed to the maintenance man at the end of March?

Question

Quizplus · Accepted Answer

The maintenance man will work for 4 months from February to May, and his salary will be paid by Classic Artists' Services at the end of May.

Since Classic Artists' Services accrues maintenance expenses at the end of every month, they will need to record the amount owed to the maintenance man as of the end of each month.

At the end of March, the maintenance man will have worked for 2 months (February and March). Therefore, Classic Artists' Services will owe him 2/4 or 1/2 of his total salary, which is $16,000.

1/2 of $16,000 is $8,000, so the balance in the accounts payable account for amounts owed to the maintenance man at the end of March is a credit balance of $8,000.

Classic Artists' Services Has Hired a Maintenance Man to Maintain