During 2019 Annette's Mechanical paid out $85 000 in wages from its bank account. This $85 000 included $5 400 that was owing but unpaid at year-end for 2018. At year-end 2019 wages owing but unpaid were $12 300. The business uses accrual accounting. How much would be reported as wages expense for 2019?
A) $85 000
B) $91 900
C) $97 300
D) $12 300

Question

Quizplus · Accepted Answer

Wages expense for 2019 should include all wages paid during the year, regardless of whether they were for 2018 or 2019. Therefore, we need to add the $5,400 owing from 2018 to the $85,000 paid out in 2019, giving a total of $90,400. However, as there were $12,300 in wages owing at year-end 2019, we need to subtract that amount to arrive at the final wages expense for the year, which is $78,100 ($90,400 - $12,300). Therefore, the correct answer is B.

During 2019 Annette's Mechanical Paid Out $85 000 in Wages