Your employer has a Monday–Friday workweek; the 5-day payroll totals $35,000 eac

Question

Your employer has a Monday–Friday workweek; the 5-day payroll totals $35,000 each week. In 20X2, December 31 is a Tuesday. One of your assistants made the adjusting entry by debiting Salaries Expense and crediting Salaries Payable for $21,000. Your correcting entry will: debit Salaries Payable for $14,000; credit Salaries Expense for $14,000 debit Salaries Expense for $7,000; credit Salaries Payable for $7,000 not be necessary because the original adjusting entry was done correctly debit Salaries Expense for $14,000; credit Salaries Payable for $14,000 debit Salaries Payable for $7,000; credit Salaries Expense for $7,000

Explanation / Answer

This is the question of 1 day’s salary.

Weekly salary = $35,000

There are 5 days a week.

1 day’s salary = Weekly salary / 5 days a week = $35,000 / 5 = $7,000

Now the adjustment should be done for 2 days – Monday, and Tuesday, since the week is not yet complete for payroll.

2 day’s salary = $7,000 × 2 = $14,000

Correct adjusting entry: Debit salaries expense and credit salaries payable by the amount of $14,000.

Wrong entry made: The mistake is only with the amount – instead of $14,000 it appeared as $21,000.

The correct entry should be made by reversing the earlier entry by the amount of ($21,000 - $14,000 =) $7,000

Answer: Debit salaries payable of $7,000 and credit salaries expense of $7,000.

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