AccountingBLOCK - Accounting Forums

I would like to know the amount to debit and credit to certain accounts. Here is the scenario:

John has two employees who each get paid $150/day. Dec 31st is a Wed. These two employees will not be paid until Friday Jan 2nd. How much does john needs to debit to salary expense?

Are we talking about cash basis of accounting or accrual?

__________________
Zahid,
CTEC Registered Tax Preparer

Sorry, should have mentioned that.... I actually want to know about both of them but I am more interested in the accrual...

On the cash basis, the answer is zero as expenses are not accrued. The wages paid on Jan. 2 are expenses of the next year.

On an accrual basis the answer is the wages as of Dec. 31 which would then be paid Jan. 2, the next pay date. As to how much the answer depends on the number of days worked in the pay period ending Wednesday, Dec. 31.

You said $150/day and there r 2 employees so lets just pay period started on Monday total salaries expense would be $900

Dr. Salaries Expense
Cr. Salaries Payable
Year end adjusting entry

On Jan 2nd:

Reverse the entry posted above

Cr. Salaries Payable
Dr. Salaries Expense

__________________
Zahid,
CTEC Registered Tax Preparer