Employees have worked for the full year and have received total wages of $306,000 in cash. However, they must wait until the next payday to be paid for the last three days of the year they have worked. The amount owing is $5,500. Wages expense in the income statement and accrued wages in the balance sheet are, respectively:
A) $311,500; $0
B) $306,000; $0
C) $306,000; $5,500
D) $311,500; $5,500

Question

Quizplus · Accepted Answer

The correct wages expense for the income statement is $311,500, which includes both the cash paid ($306,000) and the amount still owed ($5,500) for the full year's work. The accrued wages of $5,500 represent the liability on the balance sheet for wages earned but not yet paid.

Employees Have Worked for the Full Year and Have Received