Question

Hello i have this accounting problems, I really do not understand how to do this and it makes me frustrated

Exercise 3-2 Adjusting and paying accrued wages LP3 Pablo Management has five employees, each of whom earns $250 per day. They are paid on Fridays for work completed Monday through Friday of the same week. Near year-end, the five employees worked Monday, December 31, and Wednesday through Friday, January 2, 3, and 4. New Year's Day (January 1) was an unpaid holiday. a. Prepare the year-end adjusting entry for wages expense. b. Prepare the journal entry to record payment of the employees' wages on Friday, January 4.

Answer 1

The Basic Concept of journal entries is debit all the expenses and assets and credit all the liabilities and revenue . The Entity at the end of year pass journal entries for getting correct profit of that financial year. For that unearned revenue and accrued expenses entries need to recognised in books of account .

EXERCISE 3-2 Journal Entries Date Particular 31-Dec Wages Expenses To Wages Payable ( Being wagrs payable for 31st dec) a. Debit Credit 1250 1250 b. 1250 3750 4-Jan Wages Payable Wages Expenses To Cash Being wages paid to employees) 5000 on 31st December only one day wages due, hence due to closing of books of account on that day we pass wages payable journal entry to record wages expenses which is related to that year wages per employee $250 per day Number of employees =5 Accrued wages = 250*5=1250 on 4th january previous year wages accrued and current year wages paid. on 1st january unpaid holiday, so company does not required to paid wages of that day, hence only 3 days need to paid so, wages Expenses= 250 per day* 3 days *5 employess =3750

EXERCISE 3-3 Credit Debit 3500 a Date Particular 30-Apr Legal Service Expenses To Legal Service Payable (Being legal service expenses accrued) 3500 35001 12-May Legal Service Payable To Cash Being accrued expenses paid ) 3500 b 3000 30-Apr Interest Expenses To Interest Payable (Being Interest Expenses accrued) 3000 20-May Interest Payable Interest Expenses To Cash 3000 6000 9000 C 4000 30-Apr Salaries Expenses To Salary Payable Being 2 days salary accrued) 4000 4000 6000 3-May Salary Payable Salaries Expenses To Cash Being salary paid ) 10000 5 day salary =10000 Two day salary = 10000 *2 5 4000

EXERCISE 3-6 a Date Particular 31-Dec Depreciation Expenses- Equiptment To Accumulated Depreciation -Equiptment (Being depreciation on wine turbine equiptment charged) Debit Credit 5000 5000 b 1400 1400 31-Dec Insurance Expenses To Prepaid Insurance (Being insurance expenses recognised as on 31st dec prepaid insurance balance is $600) с 2000 31-Dec Consulting Revenue To Unearned revenue Being two third unearned revenue recognised) 2000 d 1200 31-Dec Wages Expenses To Wages Payable Being wages expenses accrued) 1200 e 4001 31-Dec Interest Receivable To Interest revenue Being interest receivable on investment) 400