Salaries are 4500 per week for five working days and are pai

Salaries are $4,500 per week for five working days and are paid weekly at the end of the day Fridays. The end of the month falls on a Thursday. The accountant for Dayton Company made the appropriate accrual adjustment and posted it to the ledger. The balance of Salaries Payable, as shown on the adjusted trial balance, will be a ________. (Assume that there was no beginning balance in the Salaries Payable account.)

a.credit balance of $3,600
b.debit balance of $900
c.debit balance of $3,600
d.credit balance of $900

Solution

Solution:

Primary working:

Salaries are paid weekly on Friday. It means week end on Friday (5 days per week). So the 5 days salary $4,500 paid on Every Friday.

End of the Month falls on Thursday. It means Monday, Tuesday, Wednesday and Thursday’s (4 days) salaries are outstanding for this month since the last day in Thursday.

Hence, 4 days salaries are as follows:

5 Days Salaries = $4,500

1 Day salaries = $4,500 / 5 = $900

4 Days Salaries = 1 Day Salary x 4 = $900 * 4 = $3,600

Hence, at the end of the month (Thursday) following adjustment entry is to be passed:

Debit: Salary Expense $3,600

Credit: Salary Payable $3,600

So the adjusted trial balance will be a credit balance of $3,600.

Hence, the correct option is a. credit balance of $3,600

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