H Ltd pays salaries each Friday afternoon to cover the previous five working days (up to and including Friday).The weekly wages' bill is $500 000.The end of the accounting period falls on a Monday.The adjusting journal entry will be:

Question

Quizplus · Accepted Answer

Since the end of the accounting period falls on a Monday, there will be two days (Saturday and Sunday) for which wages have been earned but not yet paid. Therefore, the adjusting journal entry will be to accrue $100,000 in wages expense and accrued wages. This means debiting Wages expense for $100,000 and crediting Accrued wages for $100,000.

H Ltd Pays Salaries Each Friday Afternoon to Cover the Previous