Employees have worked for the full year and have received total wages of $305,000 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 $6,500. Wages expense in the statement of financial performance and accrued wages in the statement of financial position are respectively:
A)$311,500 and $6,500.
B)$306,000 and $5,500.
C)$306,000 and $0.
D)$311,500 and $0.

Question

Quizplus · Accepted Answer

The total wages paid for the entire year are $305,000. The accrued wages for the last three days of the year are $6,500. Therefore, the total wages expense for the year is $305,000 + $6,500 = $311,500. This amount will be recorded in the statement of financial performance.

The accrued wages for the last three days of the year, which have not been paid yet, are $6,500. This amount will be recorded as an accrued liability in the statement of financial position. Therefore, the answer is A.

Employees Have Worked for the Full Year and Have Received