Adjustment for accrued expense Prospect Realty Co. pays weekly salaries of $27,600 on Monday for a six-day workweek ending the preceding Saturday. Journalize the necessary adjusting entry at the end of the accounting period, assuming that the period ends on Friday.

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Financial And Managerial Accounting

15th Edition

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Publisher: Cengage Learning,

ISBN: 9781337902663

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Financial And Managerial Accounting

15th Edition

WARREN + 1 other

Publisher: Cengage Learning,

ISBN: 9781337902663

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Answer 4

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Answer 5

To determine

Journalize the adjusting transactions as given in the books of Company PR.

Explanation of Solution

Adjusting entries:

Adjusting entries refers to the entries that are made at the end of an accounting period in accordance with revenue recognition principle, and expenses recognition principle. All adjusting entries affect at least one income statement account (revenue or expense), and one balance sheet account (asset or liability).

Rules of Debit and Credit:

Following rules are followed for debiting and crediting different accounts while they occur in business transactions:

• Debit, all increase in assets, expenses and dividends, all decrease in liabilities, revenues and stockholders’ equities.
• Credit, all increase in liabilities, revenues, and stockholders’ equities, all decrease in assets, expenses.
• In this case, Company PR incurred the salaries expense but cash is not yet paid. So, the necessary adjusting entry that the Company PR should record to recognize the accrued expense is as follows:
•

Date	Description	Post. Ref	Debit ($)	Credit ($)
	Salaries expense (1)		23,000
	Salaries payable			23,000
	(To record the salaries expense incurred at the end of the Friday)

Table (1)

Working note:

Calculate the value of salaries expense at end of the Friday

Salaries expense = [(Value of weekly salariesNo

Adjustment for accrued expense Prospect Realty Co. pays weekly salaries of $27,600 on Monday for a six-day workweek ending the preceding Saturday. Journalize the necessary adjusting entry at the end of the accounting period, assuming that the period ends on Friday.

Financial And Managerial Accounting

Solutions

Financial And Managerial Accounting

Adjustment for accrued expense

Prospect Realty Co. pays weekly salaries of $27,600 on Monday for a six-day workweek ending the preceding Saturday. Journalize the necessary adjusting entry at the end of the accounting period, assuming that the period ends on Friday.

Explanation of Solution

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