Chase Company has 10 employees,who earn a total of $1,800 in salaries each working day.They are paid on Monday for the five-day workweek ending on the previous Friday.Assume that year ended on December 31,which is a Wednesday,and all employees will be paid salaries for five full days on the following Monday.The adjusting entry needed on December 31 is:

A) Debit Salaries Expense,$5,400; credit Salaries Payable,$5,400.
B) Debit Salaries Expense,$3,600; credit Salaries Payable,$3,600.
C) Debit Salaries Expense,$9,000; credit Salaries Payable,$9,000.
D) Debit Salaries Payable,$5,400; credit Salaries Expense,$5,400.
E) Debit Salaries Expense,$5,400; credit Cash,$5,400.

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Terra Wakeland · Accepted Answer

Final Answer : A, Explanation :  Since the year ends on December 31 and employees are paid on the following Monday, the adjusting entry is needed to record the salaries earned by employees for the last week but not yet paid. Therefore, salaries expense needs to be debited and salaries payable needs to be credited. The total salary earned for 5 days is $1,800, and since employees work for 5 days a week, salaries expense for one week is $1,800. Therefore, the entry will be:Debit Salaries Expense $5,400Credit Salaries Payable $5,400

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