Question

A company owes its employees $5,000 for the year ended December 31. It will pay employees on January 6 for the previous two weeks’ salaries. the year-end adjusting on entry on December 31 will include a debit to Salaries Expense and a credit to Cash. True or False

Answer 1

Answer:

False

Explanation:

The correct balance on cash and salaries on December 31 will not include any amount related to previous or future year. Which means that the expense after 31 December will not be recorded in the previous year account.

The employee salaries expenses of $5000 would be recorded in accounts when it was accrued, the entry was:

Dr Salaries Expense $5000

Cr         Salaries Payables   $5000

So the amount paid on january would not be recorded in books of previous year and does not require any entry.