Powers Company accrued unpaid wages of $3,000 on January 31.These wages will be included in paychecks totaling $4,000 on February 2.The reversing entry will include a(n)________.
A)credit to Cash for $3,000
B)debit to Wages Payable for $4,000
C)debit to Wages Expense for $4,000
D)credit to Wages Expense for $3,000

Question

Quizplus · Accepted Answer

The reversing entry is made to undo the accrual from the previous period. Since Powers Company accrued unpaid wages of $3,000, the reversing entry would be treated as a credit to Wages Expense for $3,000. This will effectively cancel the accrual. No entry should be made to Cash, and the full payroll expense of $4,000 should not be recorded again. Therefore, the correct answer is D, a credit to Wages Expense for $3,000.

Powers Company Accrued Unpaid Wages of $3,000 on January 31