In its first year of operation,Jetway Airlines paid Salaries expense of $40 million.On December 31,it accrued an additional Salaries expense of $2 million.What should Jetway report in the income statement and balance sheet for its first year ended December 31?
A) Income statement: Salaries and Wages Expense $42 million; Balance sheet: Salaries and Wages Payable $2 million
B) Income statement: Salaries and Wages Expense $40 million; Balance sheet: Salaries and Wages Payable $2 million
C) Income statement: Salaries and Wages Expense $40 million; Balance sheet: Salaries and Wages Payable $0
D) Income statement: Salaries and Wages Payable $2 million; Balance sheet: Salaries and Wages Expense $42 million

Question

Quizplus · Accepted Answer

Jetway should report the total Salaries and Wages Expense of $42 million on the income statement, which includes both the paid and accrued expenses. The balance sheet should show $2 million as Salaries and Wages Payable, representing the accrued amount not yet paid.

In Its First Year of Operation,Jetway Airlines Paid Salaries Expense