James Myers Ltd paid salaries and wages of $450 000 during the year ended 30 June 2018. The company owes $12 000 for work carried out during the last week of June but which is not due to be paid until 3 July. Assume there were no salaries and wages outstanding at the beginning of the financial year. After the adjusting entry for the year ended 30 June 2018:

Question

Quizplus · Accepted Answer

The correct answer is A because the total salaries and wages expense reported in the income statement should include both the amounts paid during the year ($450,000) and the amounts owed but not yet paid ($12,000), totaling $462,000. The balance sheet should reflect the $12,000 as accrued salaries and wages, representing the liability for wages owed but not yet paid as of the end of the financial year.

James Myers Ltd Paid Salaries and Wages of $450 000