Salary expense is $2,200 per day, Monday through Friday, and the business pays e
ID: 2426021 • Letter: S
Question
Salary expense is $2,200 per day, Monday through Friday, and the business pays employees each Friday. If December 31 falls on a Tuesday, the adjusting entry to record accrued salaries would be to: debit Salaries Expense, $2,200; credit Salaries Payable, $2,200. debit Salaries Payable, $2,200; credit Salaries Expense, $2,200. debit Salaries Payable, $4,400; credit Salaries Expense, $4,400. debit Salaries Expense, $4,400; credit Salaries Payable, $4,400. The balance in Unearned Revenues prior to adjustment was $2,750. If the amount still unearned as of the end of the period is $1,100, the adjusting entry needed would be to: debit Unearned Service Revenue, $1,650; credit Service Revenue, $1,650. debit Service Revenue, $1,650; credit Unearned Service Revenue, $1,650. debit Cash, $2,750; credit Unearned Service Revenue, $785. debit Unearned Service Revenue, $1,100; credit Service Revenue, $1,100.Explanation / Answer
a).
Salary expense per day = $2200 per day
As salary is paid on each friday. total Outstanding amount on 31 December (Tuesday) = salary for two days
= 2 * 2200 = $4400
Debit salaries Expense : As services are received from employees this year. This salary is expense for this year.
As per Accounting rule 'Debit all expenses' Salaries expenses A/C must be debited.
Credit Salaries Payable: As salaries is to be paid in next year, It is not paid. So it is a liabilty for a company. So salaries payable A/C is credited.
ANS: Option D.
b).
Balance of Unearned revenue in books = $ 2750
Unearned Revenue is a revenue which is not earned during this period. It is going to be earned in future period.So it is a Liabilty for a company. Obligation or work need to be done in future months to earn this revenue.
As on year end date. Amount still earned is $1100 . so $1650 is to be deducted from Unearned revenue.
Debit Unearned Revenue & Credit Service Revenue: As Unearned revenue of $1650 is earned. SO Service Revenue is credited by $1650.
Correct Option is A.
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