Question

If Dec. 31 falls on a Tuesday before the Friday of pay day (biweekly pay 100/dat), Green landscaping must accrue a liability to its employees.

When Green pays 10000 to its employees on Jan. 3, 3 days’ pay is an expense of the current year. Also, 7 days pays retired the wages payable from Dec. 31st.

Make adjusting entries

A company’s employees earn 25000 weekly, work 5 days per week (Mon-Friday) and gets paid each Friday

If the previous pay day was Jan 26 and the accounting period ends on Jan 31st, what is the ending balance in the wages payable and expense account on January 31.

Make adjusting entries

Answer 1

Green pays 10000 to its employees on Jan 3

Nof of days pertaining to current year = 3

No of days pertainining to previous year = 7

Total number of days for which payment is made = 10

Hence payment made for current year = 10000 * 3days/10days = 3000

And payment made for previous year = 10000 *7days/10days = 7000

Adjusting entries:

Previous year

Wages Expense Dr. 7000

Wages Payable Cr. 7000

(being 7 days pay from Dec 31 provisioned)

Current Year

Wages Expense Dr. 3000 (Current year)

Wages Payable Dr. 7000 (Previous year)

Cash/Bank Cr. 10000 (Total wages paid on Jan 3)

(being wages paid for current year and previous year)

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

This is related to period end accounting. Here we have to apportion the weekly employee expenses between two periods since the period end falls mid week.

Employee compensation per week = 25000

No of working days each week = 5

No of waorking days from Jan 27 to Jan 31 with Jan 27 being a Saturday = 3 days

Employee compensation to be provisioned for 3 working days of period ending Jan 31 = 25000*3/5 = 15000

Adjusting entry on Jan 31

Employee compensation Expense Dr. 15000

Wages Payable Cr. 15000

Hence ending balance in Wages payable account = 15000 (Wages provisioned for 3 days)

Ending balance in Employee compensation expense account = 4 weeks expense + wages expense provisioned for 3 days = 25000*4 + 15000 = 115000