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Chapter 3: Question 13BE (page 128)

BE3-13 (L08) Assume that Best Buy made a December 31 adjusting entry to debit Salaries and Wages Expense and credit Salaries and Wages Payable for \(4,200 for one of its departments. On January 2, Best Buy paid the weekly payroll of \)7,000. Prepare Best Buy鈥檚 (a) January 1 reversing entry; (b) January 2 entry (assuming the reversing entry was prepared); and (c) January 2 entry (assuming the reversing entry was not prepared).

Short Answer

Expert verified

Salary and wages expense amount is $7,000.

Step by step solution

01

Meaning of Reversing Entries:

Journal entries posted at the initiation of the financial year to rescind the impact of adjusting entries of the previous year is known as reversing entries. It helps in the continuity of accounting.

02

Closing Entries

Date

Accounts and Explanation

Debit $

Credit $

January, 1

Salaries and Wages Payable

$4,200

Salaries and Wages Expenses

$4,200

January, 2

Salary and Wages Expenses

$7,000

Cash

$7,000

January, 2

Salary and Wages Payable

$4,200

Salary and Wages Expenses

$2,800

Cash

$7,000

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Most popular questions from this chapter

Why are revenue and expense accounts called temporary or nominal accounts?

BE3-12 (L07) Kelly Company had cash receipts from customers in 2017 of \(142,000. Cash payments for operating expenses were \)97,000. Kelly has determined that at January 1, accounts receivable was \(13,000, and prepaid expenses were \)17,500. At December 31, accounts receivable was \(18,600, and prepaid expenses were \)23,200. Compute (a) service revenue and (b) operating expenses.

BE3-11 (L04) Side Kicks has year-end account balances of Sales Revenue \(808,900, Interest Revenue \)13,500, Cost of Goods Sold \(556,200, Administrative Expenses \)189,000, Income Tax Expense \(35,100, and Dividends \)18,900. Prepare the year-end closing entries

E3-17 (L02) (Transactions of a Corporation, Including Investment and Dividend) Scratch Miniature Golf and DrivingRange Inc. was opened on March 1 by Scott Verplank. The following selected events and transactions occurred during March.Mar. 1 Invested \(50,000 cash in the business in exchange for common stock.3 Purchased Michelle Wie鈥檚 Golf Land for \)38,000 cash. The price consists of land \(10,000, building \)22,000, and equipment\(6,000. (Make one compound entry.)5 Advertised the opening of the driving range and miniature golf course, paying advertising expenses of \)1,600.6 Paid cash \(1,480 for a one-year insurance policy.10 Purchased golf equipment for \)2,500 from Singh Company, payable in 30 days.18 Received golf fees of \(1,200 in cash.25 Declared and paid a \)500 cash dividend.30 Paid wages of \(900.30 Paid Singh Company in full.31 Received \)750 of fees in cash.Scratch uses the following accounts: Cash, Prepaid Insurance, Land, Buildings, Equipment, Accounts Payable, Common Stock,Dividends, Service Revenue, Advertising Expense, and Salaries and Wages Expense.InstructionsJournalize the March transactions. (Provide explanations for the journal entries.)

Do the following events represent business transactions?

Explain your answer in each case

  1. A computer is purchased on account.
  2. A customer returns merchandise and is given credit on account.
  3. A prospective employee is interviewed
  4. The owner of the business withdraws cash from the business for personal use.
  5. Merchandise is ordered for delivery next month.
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