Here's the problem:
LaBamba Company pays salaries of $10,000 every Monday for the preceeding 5-day week (Monday through Friday). Assume December 31 falls on a Tuesday, so Labamba employees have worked 2 days without being paid.
a) Assume the company DOES NOT use reversing entries. Prepare the December 31 adjusting entry and the entry on Monday January 6, when Labamba pays the payroll.
b) Assume the company DOES use reversing entries. Prepare the December 31 adjusting entry, the January 1 reversing entry, and the entry on Monday, January 6, when Labamba pays the payroll.
If you can figure this out you're a genius. I know I'm supposed to make some type of journal entires, but I'm stumped.
2007-09-28 21:40:56 · 3 answers · asked by majax79 4 in Business & Finance ➔ Other - Business & Finance
a) Assume the company DOES NOT use reversing entries. Prepare the December 31 adjusting entry and the entry on Monday January 6, when Labamba pays the payroll.
Dec 31:
Dr Salaries expense 4,000
Cr Salaries payable 4,000
(to accrue for 2 days' salary)
Jan 6:
Dr Salaries expense 6,000
Dr Salaries payable 4,000
Cr Cash 10,000
b) Assume the company DOES use reversing entries. Prepare the December 31 adjusting entry, the January 1 reversing entry, and the entry on Monday, January 6, when Labamba pays the payroll.
Dec 31:
Dr Salaries expense 4,000
Cr Salaries payable 4,000
(to accrue for 2 days' salary)
Jan 1:
Dr Salaries payable 4,000
Cr Salaries expense 4,000
(to reverse entries of Dec 31)
Jan 6:
Dr Salaries expense 10,000
Cr Cash 10,000
2007-09-28 22:28:58 · answer #1 · answered by Sandy 7 · 2⤊ 0⤋
a. ASSUMPTION: REVERSING ENTRIES ARE NOT MADE
31st December
Dr. Salary A/c $4,000 (i.e. $10,000 x 2/5)
Cr. Salary payable $ 4,000
January 6th
Dr. Salary Payable $ 4,000
Cr. Bank $ 4,000
b. ASSUMPTION REVERSING ENTRIES ARE PASSED
31st December
Dr. Salary A/c $4,000 (i.e. $10,000 x 2/5)
Cr. Salary payable $ 4,000
January 1st
Dr. Salary Payable $ 4,000
Cr. Salary $ 4,000
January 6th
Dr. Salary $ 4,000
Cr. Bank $ 4,000
Only entries pertaining to the 2 days are given above. The salary from 1st Jan to 3rd Jan is assumed to be passed seperately
Hope that answers your question...!
Cheers!!!!
2007-09-28 21:53:41 · answer #2 · answered by Kishore 3 · 0⤊ 0⤋
is this a direction you're taking? if so you will desire to start examining so which you're able to do those entries on your very own. that's the 2d you published in a row. how are you going to income?
2016-12-28 06:57:08 · answer #3 · answered by ? 3 · 0⤊ 0⤋