Reference no: EM132535110

ABC Ltd employ its staff on a five-day work week, with employees being paid on Fridays. The weekly salaries expense is $100,000 and employees are paid in arrears. That is, when the employees are paid, the salaries paid are for work performed in the preceding week. ABC Ltd retains $30 000 per week to pay the Australian Taxation Office for PAYG tax on behalf of the employees. This is paid on the following Monday of each week. It also retains $5000 per week to pay staff premiums to the XYZ Medical Benefits Fund.

Required:

Question a) If we assume that the reporting date falls on a Thursday, what would the accounting entry at reporting date be to recognise four days' salary and wages expense?

Wages and Salaries expense. DR CR

Tax Payable -PAYG

Medical benefits payable

Wages and salaries payable

Question b) Prepare the appropriate journal entries when the wages are ultimately paid to the employees on Friday.