The employees of Neat Clothes work Monday through Friday. Every other Friday the company issues payroll checks totaling $32,000 (or $3,200 per weekday). The current pay period ends on Friday, January 3. Neat Clothes is now preparing financial statements for the year ended December 31. What is the adjusting entry to record accrued salaries at the end of the year?
A) Debit Salaries Payable and credit Salaries Expense for $22,400.
B) Debit Salaries Expense and credit Salaries Payable for $6,400.
C) Debit Salaries Expense and credit Salaries Payable for $9,600.
D) Debit Salaries Expense and credit Salaries Payable for $22,400.
Answer: D
A company receives a utility bill each month for services received. The company's policy is to pay the utility bill within 30 days of receipt. On December 31, 2021, the company receives a utility bill of $4,200 for the month of December and plans to pay the bill by January 30, 2022. What adjusting entry, if any, will the company record on December 31, 2021?
A) Debit Utilities Expense and credit Cash for $4,200.
B) Debit Utilities Expense and credit Utilities Payable for $4,200.
C) Debit Utilities Payable and credit Utilities Expense for $4,200.
D) No adjusting entry is necessary at the end of the year.
Answer: B
A company owes employee salaries of $16,000 at the end of the year. These salaries will be paid in the following year. What adjusting entry, if any, does the company need to record at the end of the year?
A) Debit Salaries Expense and credit Cash for $16,000.
B) Debit Salaries Expense and credit Salaries Payable for $16,000.
C) Debit Salaries Payable and credit Salaries Expense for $16,000.
D) No adjusting entry is necessary at the end of the year.
Answer: B
