What is the journal entry for the $5,000 wages payment on August 07, 2020? What is the journal entry of accrued expense for wages in the July 31 adjusting entry?Ģ. Hence, at the end of July, the company needs to recognize the expense of $2,500 (5,000 / 10 x 5) that the employees have worked for five days (from Monday 27 th to Friday 31 st).ġ. The next wage payment will not occur until August 07, 2020. On July 24, 2020, the company made the $5,000 wages payment for the two weeks (or ten days) of work the employees have performed. has the policy to pay the wages to its employees every two weeks. This journal entry does not affect the income statement as the company has already recognized the expense at the last period-end adjusting entry. Account Debit Credit Payables 000 Cash 000 Likewise, this journal entry increases both the expense (debit) in the income statement and the liability (credit) in the balance sheet.Īfter the company makes the payment, it can make the journal entry to eliminate liability by debiting the payables account and crediting the cash account. The company makes this journal entry to recognize the incurred expense as well as the obligation existed at the end of the period. Account Debit Credit Expense 000 Payables 000 The company can make the accrued expense journal entry by debiting the expense account and crediting the payables account. Hence, without a proper record of the accrued expense at the period end adjusting entry, both total liabilities in the balance sheet and total expenses in the income statement will be understated. Likewise, at the period end adjusting entry, the company needs to account for all the accrued expenses with appropriate journal entries.Īccrued expense journal entry is made to record the expense that has already incurred as well as to recognize the obligation liability that the company has. The accrued expenses may include interest expense, salaries and wages, and utility expenses, etc. Accrued expense is the expense that has already incurred during the period but has not been paid for yet.
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