Prospect Realty Co. pays weekly salaries of $9,570 on Monday for a six-day workweek ending the preceding Saturday. Journalize the necessary adjusting entry at the end of the accounting period, assuming that the period ends on Friday. Refer to the Chart of Accounts for exact wording of account titles. Round your answer to the nearest dollar.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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**Adjusting Entries for Weekly Salaries**

**Scenario:**

Prospect Realty Co. pays weekly salaries of $9,570 on Monday for a six-day workweek ending the preceding Saturday.

**Task:**

Journalize the necessary adjusting entry at the end of the accounting period, assuming that the period ends on Friday. Refer to the Chart of Accounts for exact wording of account titles. Round your answer to the nearest dollar.

**Solution:**

1. **Identify the total weekly salary to be adjusted:**  
   Weekly Salary = $9,570

2. **Determine the daily salary rate:**  
   Since the salary covers a six-day workweek (Monday to Saturday), the daily salary is calculated as follows:  
   Daily Salary = Total Weekly Salary ÷ Number of Workdays  
   Daily Salary = $9,570 ÷ 6  
   Daily Salary = $1,595

3. **Calculate the accrued salary for the accounting period ending on Friday:**  
   The salary to be adjusted for five days (Monday to Friday) is:  
   Accrued Salary = Daily Salary ✕ Number of Days Worked  
   Accrued Salary = $1,595 ✕ 5  
   Accrued Salary = $7,975

4. **Journal Entry:**
   - Debit: Salaries Expense $7,975
   - Credit: Salaries Payable $7,975

This adjusting entry recognizes the salary expense incurred for the five days worked (Monday to Friday), ensuring that expenses are matched with the period in which they are incurred.
Transcribed Image Text:**Adjusting Entries for Weekly Salaries** **Scenario:** Prospect Realty Co. pays weekly salaries of $9,570 on Monday for a six-day workweek ending the preceding Saturday. **Task:** Journalize the necessary adjusting entry at the end of the accounting period, assuming that the period ends on Friday. Refer to the Chart of Accounts for exact wording of account titles. Round your answer to the nearest dollar. **Solution:** 1. **Identify the total weekly salary to be adjusted:** Weekly Salary = $9,570 2. **Determine the daily salary rate:** Since the salary covers a six-day workweek (Monday to Saturday), the daily salary is calculated as follows: Daily Salary = Total Weekly Salary ÷ Number of Workdays Daily Salary = $9,570 ÷ 6 Daily Salary = $1,595 3. **Calculate the accrued salary for the accounting period ending on Friday:** The salary to be adjusted for five days (Monday to Friday) is: Accrued Salary = Daily Salary ✕ Number of Days Worked Accrued Salary = $1,595 ✕ 5 Accrued Salary = $7,975 4. **Journal Entry:** - Debit: Salaries Expense $7,975 - Credit: Salaries Payable $7,975 This adjusting entry recognizes the salary expense incurred for the five days worked (Monday to Friday), ensuring that expenses are matched with the period in which they are incurred.
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