Question

Accounting Problem...Please Help!?

Lopez Management has five part-time employees, each of whom earns $250 per day. They are normally paid on Fridays for work completed Monday through Friday of the same week. They were paid in full on Friday, December 28, 2008. The next week, the five employees worked only four days because New Year's Day was an unpaid holiday. Show (a) the adjusting entry that would be recorded on Monday December 31, 2008, and (b) the journal entry that would be made to record payment of the employees' wages on Friday, January 4, 2009.

Answers

ok so first let's figure out how much money they pay employees per day

250*5=1250 per workday

let's write out the entire workweek, with the $1250 per day:

monday: december 31 $1250

tuesday: jan 1 UNPAID HOLIDAY $0

wednesday: jan 2 $1250

thursday: jan 3 $1250

friday: jan 4 $1250

ok, so with all that info taken care of, we can begin. only one day of work has been accrued for the december payperiod (monday)

so this adjusting entry would be:

wages expense debit of $1250

wages payable credit of $1250

now for the january fourth:

wages expense debit of (1250*3)=3750

wages payable debit of $1250 that are owed to the employees from that monday

cash credit of (3750+1250)=$5000

#1