https://file.aiquickdraw.com/mathbot/file/1726666440822zvvkbych.jpg

Let's break down and solve both of the accounting problems shown in the image:

### 1. Salary Adjusting Entries
- **Problem Statement**: A business pays weekly salaries of $10,000 on Friday for a 5-day week (Monday to Friday). We are asked to show the adjusting entry when the fiscal period ends on:
  - (a) Tuesday
  - (b) Thursday

#### Solution:
The weekly salary of $10,000 is spread over 5 days, so the daily salary is:

\[
\text{Daily salary} = \frac{10,000}{5} = 2,000 \text{ per day}
\]

##### (a) Fiscal period ends on Tuesday
If the fiscal period ends on Tuesday, the company has incurred salary expenses for Monday and Tuesday (2 days). Therefore, the salary adjustment will be:

\[
\text{Accrued salary expense} = 2,000 \times 2 = 4,000
\]

**Adjusting Journal Entry:**
- Debit: Salaries Expense $4,000
- Credit: Salaries Payable $4,000

##### (b) Fiscal period ends on Thursday
If the fiscal period ends on Thursday, the company has incurred salary expenses for Monday, Tuesday, Wednesday, and Thursday (4 days). Therefore, the salary adjustment will be:

\[
\text{Accrued salary expense} = 2,000 \times 4 = 8,000
\]

**Adjusting Journal Entry:**
- Debit: Salaries Expense $8,000
- Credit: Salaries Payable $8,000

---

### 2. Insurance Adjusting Entry
- **Problem Statement**: An insurance policy covering a 2-year period was purchased on November 1 for $600. The amount was debited to Prepaid Insurance. Show the adjusting entry for the 2-month period ending December 31.

#### Solution:
The total policy cost is $600 for 2 years, or 24 months. Therefore, the monthly cost of the insurance policy is:

\[
\text{Monthly insurance expense} = \frac{600}{24} = 25 \text{ per month}
\]

For the 2 months (November and December), the total insurance expense is:

\[
\text{Insurance expense for 2 months} = 25 \times 2 = 50
\]

**Adjusting Journal Entry:**
- Debit: Insurance Expense $50
- Credit: Prepaid Insurance $50

---

Would you like more details or explanations on these entries? Here are 5 related questions to consider:

1. What is the impact of adjusting entries on the income statement and balance sheet?
2. How are accrued expenses different from prepaid expenses?
3. What happens if adjusting entries are not made in a timely manner?
4. Can the timing of payroll payments affect cash flow management?
5. How do adjusting entries affect a company's financial health at year-end?

**Tip**: Adjusting entries are crucial to ensure that revenues and expenses are recorded in the correct accounting period, following the matching principle in accrual accounting.

1. A business pays weekly salaries of $10,000 on Friday for the 5-day week. Show the adjusting entry when the fiscal period ends on (a) Tuesday; (b) Thursday. 2. An insurance policy covering a 2-year period was purchased on November 1 for $600. The amount was debited to Prepaid Insurance. Show the adjusting entry for the 2-month period ending December 31.

Learn how to calculate adjusting entries for salaries and insurance policies in accrual accounting. This problem covers salary expenses when the fiscal period ends mid-week, and insurance expenses over a 2-month period. Suitable for undergraduate accounting students.

Math Problem Statement

Solution

Ask a new question for Free

By Image

Math Problem Analysis

Mathematical Concepts

Formulas

Theorems

Suitable Grade Level

Related Recommendation