Question

Adjustment for Accrued Salaries Laguna Realty Co. pays weekly salaries of $8,000 on Friday for a five-day week ending on that day. What is the adjustment at the end of the accounting period, assuming that the period ends (a) on Monday or (b) on Wednesday

Answer 1

To adjust for accrued salaries at Laguna Realty Co., we calculate the prorated salary for the days worked but not yet paid within the accounting period. For a period ending on Monday, three days of salary are accrued, totaling $4,800. For a period ending on Wednesday, five days are accrued, totaling the full weekly salary of $8,000.

Step-by-step explanation:

The subject question deals with the adjustment for accrued salaries in accounting. Here's how to calculate the adjusting entries at the end of an accounting period:

Adjustment When Period Ends on Monday

Since the company pays weekly salaries on Friday for a five-day week, we need to account for the salaries accrued from Friday to Monday. That's three days of salaries:

• Friday (already paid, no adjustment needed)
• Saturday (accrued)
• Sunday (accrued)
• Monday (accrued)

Adjustment calculation for Monday is 3 days/5 days times the weekly salary of $8,000, which equals $4,800.

Adjustment When Period Ends on Wednesday

For a period ending on Wednesday, we again consider only the extra days after Friday:

• Saturday (accrued)
• Sunday (accrued)
• Monday (accrued)
• Tuesday (accrued)
• Wednesday (accrued)

The adjustment calculation for Wednesday is 5 days/5 days times the weekly salary of $8,000, which equals the full weekly salary amount, $8,000.