The Employees of Dew Drop Inn Get Paid Every Friday

question 201

Multiple Choice

The employees of Dew Drop Inn get paid every Friday for a 5-day workweek (Monday through Friday) .The total payroll is $5,000 per day of work.If the accounting period ends on Thursday of a given week,what adjustment must be made to the company's accounting records?

• A)Decrease Cash by $20,000 and decrease shareholders' equity by recognizing Salaries expense for the same amount.
• B)Increase Salaries payable by $20,000 and increase shareholders' equity by recognizing Salaries expense for the same amount.
• C)Increase Salaries payable by $20,000 and decrease shareholders' equity by recognizing Salaries expense for the same amount.
• D)No adjustment is necessary because there is no expense until the employees are paid on Friday.

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