Chapter 4, Problem 4.27AE

Journalizing reversing entries

Ocean View Services had the following unadjusted balances at December 31, 2016: Salaries Payable, $0; Salaries Expense, $ 1,400. The following transactions have taken place at the end of 2016 and beginning of 2017:

2016
Dec. 31	Accrued Salaries Expense at December 31, $3,000.
31	Closed the Salaries Expense account.
2017
Jan. 1	Reversed the accrued salaries . (Requirement 3 only)
4	Paid salaries of $4,400. This payment included the Salaries Payable amount, plus $1,400 for the first few days of January.

Requirements

1. Open T-accounts for Salaries Payable and Salaries Expense using their unadjusted balances at December 31, 2016.

2. Journalize the entries assuming Ocean View Services does not use reversing entries.

Do not record the reversing entry on Jan. 1. Post to the accounts.

3. Open new T-accounts for Salaries Payable and Salaries Expense using their unadjusted balances at December 31, 2016. Journalize the entries assuming Ocean

View Services uses reversing entries. Don’t forget to record the reversing entry on

Jan. 1. Post to the accounts. Compare the balances with Requirement 2 balances.