Question

In: Accounting

Denton Corporation employs 70 workers in its plant. Each employee is paid $10 per hour and...

Denton Corporation employs 70 workers in its plant. Each employee is paid $10 per hour and works seven hours per day, Monday through Friday. Employees are paid every Friday. The last payday was Friday, September 19.

Required:

1. Compute the dollar amount of the weekly payroll.
2. Prepare the journal entry on Friday, September 26, for the payment of the weekly payroll.
3. Denton prepares monthly financial statements. Prepare the adjusting journal entry on Tuesday, September 30, the last day of the month.
4. Prepare the journal entry on Friday, October 3, for the payment of the weekly payroll.
5. Will net income for the month of September be understated or overstated if Denton doesn’t bother with an adjusting entry on September 30?

Solutions

Expert Solution

Requirement 1

Answer -- Dollar amount of the weekly payroll= $24,500

Working

A

Number of Workers

70

B

Number of Working hours in a day

7

C

Number of days in a week

5

D=CxB

Number of hours in a week

35

E

Payment per hour

$          10.00

F=E x D

Payment to one worker

$        350.00

G= F x 70

Payment to 70 Workers in a week

$ 24,500.00

Requirement 2

Date

General Journal

Debit

Credit

29-Sep

Wages expense

$ 24,500.00

           Cash

$ 24,500.00

(Wages paid for the week)

Requirement 3

Date

General Journal

Debit

Credit

30-Sep

Wages expense

$    9,800.00

          Wages payable

$    9,800.00

(Wages payable for two days)

Wages for 5 days= $24,500

Wages for 1 day=$24,500/5= $4,900

Wages for 2 days = 4900 x 2 =$9,800

Requirement 4

Date

General Jopurnal

Debit

Credit

3-Oct

Wages expense

$ 14,700.00

Wages payable

$    9,800.00

              Cash

$ 24,500.00

(Wages paid for the week)

2 days expense has already been recorded on sep 30 so only 3 days expense will be recognized on 3rd October.

Requirement 5

If Adjustment entry is not passed the income would be overstated. Income would be overstated because of Understatement of Expense for 2 days of wages.

ekkarill92 answered 1 year ago
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