Colaw CoPays All Salaried Employees on a Biweekly Basis

question 28

Multiple Choice

Colaw Co.pays all salaried employees on a biweekly basis.Overtime pay, however, is paid in the next biweekly period.Colaw accrues salaries expense only at its December 31 year end.Data relating to salaries earned in December 2007 are as follows: Last payroll was paid on 12/26/07, for the 2-week period ended 12/26/07.
Overtime pay earned in the 2-week period ended 12/26/07 was $10,000.
Remaining work days in 2007 were December 29, 30, 31, on which days there was no overtime.
The recurring biweekly salaries total $180,000.
Assuming a five-day work week, Colaw should record a liability at December 31, 2007 for accrued salaries of

• A)$54,000.
• B)$64,000.
• C)$108,000.
• D)$118,000.

---

Definitions:

Redemption Of Bonds

Redemption of bonds is the process by which a bond issuer repays the principal amount of the bond to the bondholders at maturity.

Income Statement

A financial statement that shows a company's revenues and expenses over a specific period, resulting in a net profit or loss.

Callable Bonds

Bonds that can be redeemed by the issuer before their maturity date at a specified call price, allowing issuers to refinance debt if interest rates decline.

Fair Market Price

The price that a willing buyer and a willing seller agree upon, assuming both parties have reasonable knowledge of the item's relevance and are under no pressure to buy or sell.