Chapter 4: Q28E (page 228)

Mountain View Services had the following unadjusted balances at December 31, 2018:
Salaries Payable, $0; and Salaries Expense, $1,900. The following transactions havetaken place at the end of 2018 and beginning of 2019:
2018
Dec. 31 Accrued Salaries Expense at December 31, $8,000.
31 Closed the Salaries Expense account.
2019
Jan. 1 Reversed the accrued salaries. (Requirement 3 only)
4 Paid salaries of $8,500. This payment included the Salaries Payable amount,
plus $500 for the first few days of January.
Requirements
1. Open T-accounts for Salaries Payable and Salaries Expense using their unadjustedbalances at December 31, 2018.
2. Journalize the entries assuming Mountain View Services does not use reversing entries. Do not record the reversing entry on Jan. 1. Post to the accounts.
3. Open new T-accounts for Salaries Payable and Salaries Expense using their unadjusted balances at December 31, 2018. Journalize the entries assuming Mountain
View Services uses reversing entries. Don’t forget to record the reversing entry on Jan. 1. Post to the accounts. Compare the balances on January 4, 2019 with Requirement 2 balances on January 4, 2019.

Expert verified

(1) T accounts are mentioned in Step 1.

(2).Journal entries are recorded in Step 2.

(3) Reversing entries are recorded and posted in Step 3. Balance in both account is same as requirement 2.

Step by step solution

(2) Journal entries are as follows:

Date	Accounts and Explanation	Debit	Credit
Dec. 31,2018	Salaries Expense	$8,000
	Salaries Payable		$8,000
	To record accrued salaries expense

Dec. 31,2018	Income Summary	$9,900
	Salaries Expense		$9,900
	To close salaries expense

Jan. 4,2019	Salaries Expense	$500
	Salaries Payable	$8,000
	Cash		$8,500
	To record payment of salaries expense

T accounts are as follows:

(3) Adjusting entries are as follows:

Date	Accounts and Explanation	Debit	Credit
Dec. 31	Salaries Expense	$8,000
	Salaries Payable		$8,000
	To record accrued salaries expense

Dec. 31	Income Summary	$8,000
	Salaries Expense		$8,000
	To close salaries expense

Jan.1	Salaries Payable	$8,000
	Salaries Expense		$8,000
	To reverse accrued salaries expense

Jan. 4	Salaries Expense	$8,500
	Cash		$8,500
	To record payment of salaries expense