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Q28E

Expert-verified
Horngren'S Financial And Managerial Accounting
Found in: Page 228

Short Answer

Mountain View Services had the following unadjusted balances at December 31, 2018:

Salaries Payable, $0; and Salaries Expense, $1,900. The following transactions havetaken place at the end of 2018 and beginning of 2019:

2018

Dec. 31 Accrued Salaries Expense at December 31, $8,000.

31 Closed the Salaries Expense account.

2019

Jan. 1 Reversed the accrued salaries. (Requirement 3 only)

4 Paid salaries of $8,500. This payment included the Salaries Payable amount,

plus $500 for the first few days of January.

Requirements

1. Open T-accounts for Salaries Payable and Salaries Expense using their unadjustedbalances at December 31, 2018.

2. Journalize the entries assuming Mountain 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, 2018. Journalize the entries assuming Mountain

View Services uses reversing entries. Don’t forget to record the reversing entry on Jan. 1. Post to the accounts. Compare the balances on January 4, 2019 with Requirement 2 balances on January 4, 2019.

(1) T accounts are mentioned in Step 1.

(2).Journal entries are recorded in Step 2.

(3) Reversing entries are recorded and posted in Step 3. Balance in both account is same as requirement 2.

See the step by step solution

Step by Step Solution

Step-by-Step-Solution  Step 1: T accounts

Salaries Expense

Un, Adj, Bal.

$1,900

Bal.

$1,900

Salaries Payable

$0

Un, Adj, Bal

$0

Bal.

Step 2: Journal entries and T accounts

(2) Journal entries are as follows:

Date

Accounts and Explanation

Debit

Credit

Dec. 31,2018

Salaries Expense

$8,000

Salaries Payable

$8,000

To record accrued salaries expense

Dec. 31,2018

Income Summary

$9,900

Salaries Expense

$9,900

To close salaries expense

Jan. 4,2019

Salaries Expense

$500

Salaries Payable

$8,000

Cash

$8,500

To record payment of salaries expense

T accounts are as follows:

Salaries Expense

Un, Adj, Bal.

$1,900

Dec. 31,2018

$8,000

Bal.

$9,900

$9,900

Clos.2

Bal. Jan.1,2019

$0

$500

Bal. Jan.4,2019

$500

Salaries Payable

$0

Un, Adj, Bal

$8,000

Dec. 31,2018

Jan.4,2019

$8,000

$8,000

Bal. Jan.1,2019

$0

Bal. Jan.4,2019

Step 3: Adjusting Entries Recording and Postings

(3) Adjusting entries are as follows:

Date

Accounts and Explanation

Debit

Credit

Dec. 31

Salaries Expense

$8,000

Salaries Payable

$8,000

To record accrued salaries expense

Dec. 31

Income Summary

$8,000

Salaries Expense

$8,000

To close salaries expense

Jan.1

Salaries Payable

$8,000

Salaries Expense

$8,000

To reverse accrued salaries expense

Jan. 4

Salaries Expense

$8,500

Cash

$8,500

To record payment of salaries expense

T accounts are as follows:

Salaries Expense

Un, Adj, Bal.

$1,900

Dec. 31,2018

$8,000

Bal.

$9,900

$9,900

Clos.2

Bal. Jan.1,2019

$0

$8,000

Jan.1,2019

Jan.4,2019

$8,500

Bal. Jan.4,2019

$500

Salaries Payable

$0

Un, Adj, Bal

$8,000

Dec. 31,2018

$8,000

Bal. Jan.1,2019

Jan.1,2019

$8,000

$0

Bal. Jan.4,2019

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