What do you mean by salaries, Accounting Basics

Assignment Help:

Q. What do you mean by Salaries?

The recording of the payment of employee salaries typically involves a debit to an expense account and a credit to Cash. But for a company pays salaries on the last day of the accounting period for a pay period ending on that date it must make an adjusting entry to record any salaries incurred but not yet paid.

Micro Train Company paid USD 3600 of salaries on Friday 2010 December 28 to cover the first four weeks of December and the entry made at that time was:

239_Salaries.png

Suppose that the last day of December 2010 falls on a Monday this expense account doesn't show salaries earned by employees for the last day of the month. Nor does any account illustrate the employer's obligation to pay these salaries. The T-accounts pertaining to salaries emerge as follows before adjustment:

78_Salaries1.png

Prerequisite salaries are USD 3600 for four weeks they are USD 900 per week. Meant for a five-day workweek daily salary is USD 180. Micro Train formulates the following adjusting entry on December 31 to accrue salaries for one day:

84_Salaries2.png

Subsequent to adjustment the two T-accounts involved appear as follows

 

1231_Salaries3.png

The debit in the regulating journal entry brings the month's salaries expense up to its correct USD 3780 amount for income statement purposes. The credit to Salaries Payable files the USD 180 salary liability to employees. The balance sheet illustrates salaries payable as a liability. Another instance of a liability/expense adjustment is when a company incurs interest on a note payable. The debit would exist to Interest Expense and the credit would be to Interest Payable.


Related Discussions:- What do you mean by salaries

Scheduled for production, Lego Toys is planning to produce new toys at its ...

Lego Toys is planning to produce new toys at its factories.  The setup cost of the production facilities, production costs and profits for each toy are given below: Toy    Setup c

Show work and formulas, An airfoil of surface area 1ft squared is tested fo...

An airfoil of surface area 1ft squared is tested for lift (L) in a wind tunnel. At an angle of attack of 5 degrees with standard air of density 0.0024 slugs/ft cube at a speed of 1

Overestimate the profitability of the business, In Exhibit the accurately s...

In Exhibit the accurately stated ending inventory for the year 2009 is USD 35000. As a result Allen has a gross margin of USD 135000 as well as net income of USD 50000. The stateme

Prepaid or period expense, Are mailing lists are considered as prepaid or p...

Are mailing lists are considered as prepaid or period expens?

Shareholders and investors, Shareholders and Investors: as shareholders an...

Shareholders and Investors: as shareholders and the other investors have invested their wealth in a business activity, they are interested in understanding periodically regarding

Learning objectives of horizontal and vertical analysis, Q. Learning object...

Q. Learning objectives of Horizontal and vertical analysis? - An account is a storage element used to classify and summarize money measurements of business activities of a simi

What are derivatives?, Derivative instrument is an asset which develops i.e...

Derivative instrument is an asset which develops i.e. takes its origin from another asset. The simplest form of derivative is a forward contract, "It is an agreement to buy or s

Concepts of accounting, What are the implications of applying accounting co...

What are the implications of applying accounting concepts wrongly?

Money measurement concept, In accounting, only those facts that can be expr...

In accounting, only those facts that can be expressed in terms of money are recorded. When money is accepted not merely as a medium of exchange but also as a measuring rod of value

Measurement process in accounting, Earlier we defined accounting as the pro...

Earlier we defined accounting as the process of measuring, identifying and communicating economic information to permit informed judgments and decisions by the users of the informa

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd