The Employees of Dew Drop Inn Get Paid Every Friday

question 161

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,and the proper adjustment is made on Thursday,what will be the effect on the company's accounting system on Friday when the employees are paid for the week?

• A)Decrease Cash by $25,000 and decrease shareholders' equity by recognizing Salaries expense for the same amount.
• B)Decrease Cash by $25,000,decrease shareholders' equity by recognizing Salaries expense for $20,000 and decrease Salaries payable by $5,000.
• C)Decrease Cash by $25,000,decrease shareholders' equity by recognizing Salaries expense for $5,000 and decrease Salaries payable by $20,000.
• D)Decrease Cash by $5,000 and decrease shareholders' equity by recognizing Salaries expense for the same amount.

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Definitions:

Walmart

A global retail giant based in the US that runs a series of massive supercenters, budget-friendly department outlets, and supermarkets.

Bathroom Cleaners

Products specifically formulated to clean, disinfect, and deodorize bathrooms, tackling various surfaces such as toilets, tiles, and sinks.

Reward Power

The ability to influence others' behavior by offering positive incentives or rewards.

Wholesale Price

The cost at which goods are sold by wholesalers to retailers or distributors, generally lower than retail prices.