Buster industries pays weekly salaries of $30,900 on friday for a five-day week ending on that day. the adjusting entry necessary at the end of the fiscal period ending on tuesday is
a. debit salaries payable, $12,360; credit cash, $12,360
b. debit drawing, $12,360; credit cash, $12,360
c. debit salary expense, $12,360; credit salaries payable, $12,360
d. debit salary expense, $12,360; credit drawing, $12,360

c. debit Salary Expense, $12,360; credit Salaries Payable, $12,360

Explanation:

If the fiscal week ends on Tuesday but payment will be made on Friday,

Amount to be accrued for

= (2/5) × 30,900

=  $12,360

To accrue for this,

Debit Salary Expense      $12,360

Credit Salaries Payable   $12,360

Being entries to record salaries earned by employees yet to be paid

The right answer is c. debit Salary Expense, $12,360; credit Salaries Payable, $12,360.

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