The company wages expense is paid every 20. With a total of 20 casual employees, the...

The company wages expense is paid every 20. With a total of 20 casual employees, the daily wage expense is Rp.4,000,000. Wages for working days after the 20th, paid on the 20th of the following month. The remaining workdays after payment of wages on October 20 are 6 days.

Make adjusting entries to be made for the preparation of the monthly financial statements as of October 31, 2015 for the transaction!

Expert Solution

Wages payable refers to the wages that a company's employees have earned, but have not yet been paid. Under the accrual method of accounting, this amount is likely recorded with an adjusting entry at the end of the accounting period so that the company's balance sheet will include the amount as a current liability.

In this case, the company is paying wages expense on 20th of every month.

Daily wage expense for employees is Rp. 4,000,000.

Remaining work days after 20th October payment of wage expense is 6 days.
Therefore, while preparing monthly financial statements, it is necessary to make adjusting entry for wages expenses for 6 days remaining in the month October which is still to be paid.

Wages payable in the month of October is Rp. 4,000,000 × 6 days

That is Rp. 24,000,000

Hence the adjusting entry to be made is,

Wages Expense Dr. 24,000,000
Wages Payable 24,000,000
(To accrue wages earned in October but paid in November)

ekkarill92 answered 1 year ago

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