Windy Harbor Boat Company pays its employees on a weekly basis each Friday. During the week ended Friday, January 3, Year 2, the company had a weekly payroll of $125,750. Assuming that the company is on a calendar basis, has a five-day workweek, and that daily wages are always the same, what adjusting journal entry (if any) would be made on December 31, Year 1?

Following adjusting journal entry is made on December 31, Year 1.

                                                                    Dr.           Cr.

Salaries and Wages Expense               $50,300

Salaries and Wages accrued Payable                 $50,300

Explanation:

Assuming there is 5 working days in the week and company pay for these only.

Per week Payment = $125,750

per day payment = 125750 / 5 = $25,150

Days Lies in Year 2 = January 3, Year 2 - December 31, Year 1 = 3 days

Days Lies in Year 1 = 5 - 3 = 2 days

Salaries and Wages accrued on December 31, Year 1 = $25,150 x 2

Salaries and Wages accrued on December 31, Year 1 = $50,300

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