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Employees earn $1,000 per five-day week ($200 per day) paid each Friday. Month-end is Tuesday 30 June, with the next payday on Friday 3 July. What month-end adjusting entry records the wages earned in June but not yet paid?
ADebit Wages Expense $1,000; credit Cash $1,000
BDebit Wages Expense $600; credit Wages Payable $600
CDebit Wages Expense $400; credit Wages Payable $400
DDebit Wages Payable $400; credit Wages Expense $400
Answer & Solution
Correct answer: C. Debit Wages Expense $400; credit Wages Payable $400
1. Two working days fall in June (Monday 29th and Tuesday 30th).
2. Wages accrued $= 2 \times 200 = 400$.
3. Wages Expense is debited $\$400$ and the liability Wages Payable is credited $\$400$, so C is correct.
4. B is the three July days ($\$600$); A pays the whole week with cash; D reverses the entry.
_Source: Jonick, Principles of Financial Accounting (CC BY-SA 4.0), §2.5.1 "Wages—Accrued Expense", p.81_