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23 February, 23:40

On December 31, 20--, Karmansky Company needed to record its accrued wages for year-end. If December 31 is a Tuesday, then Karmansky Company must account for two days of wages. The company operates on a five-day workweek, the prior week's gross pay (December 26 payday) was $32,650, and the net pay was $21,330. Journalize the adjusting entry to be made on December 31 for the accrued wages.

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  1. 24 February, 00:49
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    Debit Wages account (p/l) $13,060

    Credit Accrued wages account $13,060

    Further,

    Debit Wages account (p/l) $ 13,060

    Credit Accrued wages $ 8,532

    Credit Accrued deduction $ 4,528

    Being entries to recognized accrued wages and deductions as at 31 December.

    Explanation:

    Given that weekly gross pay

    = $32,650

    2 days pay = (2/5) * $32,650

    = $13,060

    To accrue for the two day's wage

    Debit Wages account (p/l) $13,060

    Credit Accrued wages account $13,060

    Being entries to recognize accrued wages as at December 31.

    To break it further, the deductions (such as taxes) from this gross amount

    = ((32650 - 21330) / 32650) * 13060

    = $4,528

    Net income = $ 13,060 - $ 4,528

    = $8,532

    To account for this as well, the entries would be

    Debit Wages account (p/l) $ 13,060

    Credit Accrued wages $ 8,532

    Credit Accrued deduction $ 4,528

    Being entries to recognized accrued wages and deductions as at 31 December.
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