Question

Molly Mocha employs one college student every summer in her coffee shop. The student works fiveweekdays and is paid on the following Monday. (For example, a student who works Monday throughFriday, June 1 through June 5, is paid for that work on Monday, June 8.) The coffee shop adjusts itsbooks monthly,if needed, to show salaries earned but unpaid at month-end. The student works the lastweek of July, which is Monday, July 28, through Friday, August 1. If the student earns $100 per day,what adjusting entry must the coffee shop make on July 31 to correctly record accrued salaries expensefor July?

Short answer

Salary expenses account debit and salary payable credit with $400.

Step-by-step solution

Definition of accrued salary

Accrued salary is the salary that is due but not paid.

Adjustment Salary

	Journal entry
Date	Particulars	Debit	Credit
July 31	Salary Expenses ($100 * 4)	$400
	Salary Payable		$400
	(Adjustment entry for accrued salary)

The company record the payment from July 28 to July 31 and did not record the payment for August 1 in the books of account closing on July 31.