Section 3 Accrued Expenses ( Accrued Liabilities)
Problem II 1. Your company has a 6-day workweek and payday is Saturday. Weekly salaries are $12,000, and your company contributes to each employee's pension by contributing 3% of salaries to the Pension Fund account. Make the adjusting journal entries when the accounting period ends on a Tuesday.
1. Salaries Expense 4,000* Salaries Payable 4,000 To accrue salaries expense *$12,000 weekly payroll/6days =$2,000 per day x 2 days ( Monday and Tuesday = $4,000) Pension Expense 120* Pension expense Payable To accrue pension expense *$4,000 accrued salaries expense x3% pension contribution = $120 pension expense
2. Accrue property tax expense of $1,200
2. Property Taxes 1,200 Property Payable 1,200 To accrue property tax expense.
Problem IV Your company borrows $50,000 on a 6-month, 12% note on October 1, Year end is November 30. Record the accrued interest at November 30.
A . Interest Expense 1,000 Interest Payable 1,000 To accrue 2 months interest expense($50,000x12%x2/12
2, What adjusting entry ( if any) do you record if the accounting period ends on a Saturday?
A. If the work week ends on a Saturday, the company will pay salaries for the entire week so no salaries accrue ( accrued expenses are expenses incurred before they are paid. Thus no adjusting entry is recorded; only an ordinary transaction entry is needed, However pension contributions might accrue depending on the rules of the particular plan.
Problem 1 Make the following adjusting journal entries. 1, Accrue interest expense of $3,000
A. Interest Expense 3,000 Interest Payable 3,000 To accrue interest expense
3. Accrue salaries expense of $ 10,000
A. Salaries Expense 10,000 Salaries Payable 10,000 To accrue salaries expense
Problem III Your payroll for the last week of the year (your company uses a 5-day workweek) is $40,000 and December 31 falls on a Thursday. Record the adjusting journal entry at year end.
A. Wages (or salaries) Expense 32,000* Wages (or Salaries) Payable 32,000 To accrue wages (or salaries) *$40,000 payroll x 4/5 of the week ( Monday-Thursday)=$32,000payroll expense accrued for the week.
