On December 31, 20xx, ABC company needed to record its accrued wages for year-end. If December 31 is a Thursday, then ABC company must account for four days of wages. The Company operates on a five-day workweek, the week's gross pay is $70,000, and the net pay is $42,000. What is the amount of earnings the company would need to record in the adjusting entry to be made on December 31st for the accrued wages?

Question

Business

Mitchell Wilkerson

22 August, 12:53

On December 31, 20xx, ABC company needed to record its accrued wages for year-end. If December 31 is a Thursday, then ABC company must account for four days of wages. The Company operates on a five-day workweek, the week's gross pay is $70,000, and the net pay is $42,000. What is the amount of earnings the company would need to record in the adjusting entry to be made on December 31st for the accrued wages?

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Answers (1)

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Hamza Trujillo · Answer 1

The adjusting entry is shown below:

Salary expense A/c Dr $56,000

To Salary payable A/c $33,600

To Deductions payable A/c $22,400

(Being the accrued wages are recorded and the remaining balance is credited to deductions payable account)

The computations are shown below:

For salary expense, it would be

= $70,000 * 4 days : 5 days

= $56,000

For salary payable, it would be

= $42,000 * 4 days : 5 days

= $33,600