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5 June, 11:24

DAC Company pays its employees every Friday. On January 2, 20--, the Company paid $6,000 for the 5 days beginning the previous Monday, December 29. Prepare the adjusting entry on December 31. Omit explanations. If an amount box does not require, leave it blank.

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  1. 5 June, 12:50
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    December 31 Salaries & wages expense 3600 Dr

    Salaries & wages Payable 3600 Cr

    Explanation:

    The pay week is of 5 days starting from Monday to Friday. The wage per day is,

    wage per day = 6000 / 5 = $1200 per day

    The adjusting entry is made based on the accrual or matching principle which follows that the expenses and revenue relating to a particular period should be matched and recorded in their respective periods.

    Thus, the wage expense for 3 days ending 31 December will be recorded as wages expense on 31 december for 1200 * 3 = $3600

    The credit against this entry will be wages payable as the wage will be paid on January 2.
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