7. why is an adjusting entry required at june 30 in regard to janets work? no cash has left the business in…

7. why is an adjusting entry required at june 30 in regard to janets work? no cash has left the business in this accounting period yet. 8. what is the adjusting entry that must be made on june 30 in regard to janets salary? 6 - 30 dr salary expense 200 cr salary payable 200 9. why is the journal entry in question 8 considered an accrual entry? accruing it up 10. what accrual accounting principle is illustrated by the adjusting entry in question 8? match pair 11. assuming janet is the only salaried employee, please show the ledger for company bs salary payable account at june 30. salary payable dr cr 6 - 30 200 12. please make the journal entry for when janet is paid $1,400 cash on july 12. dr 7 - 12 dr cr cash 1400 13. please show the ledger for the salary payable account at july 12, after the journal entry in question 12 has been posted to the ledger, and please show the balance.

7. why is an adjusting entry required at june 30 in regard to janets work? no cash has left the business in this accounting period yet. 8. what is the adjusting entry that must be made on june 30 in regard to janets salary? 6 - 30 dr salary expense 200 cr salary payable 200 9. why is the journal entry in question 8 considered an accrual entry? accruing it up 10. what accrual accounting principle is illustrated by the adjusting entry in question 8? match pair 11. assuming janet is the only salaried employee, please show the ledger for company bs salary payable account at june 30. salary payable dr cr 6 - 30 200 12. please make the journal entry for when janet is paid $1,400 cash on july 12. dr 7 - 12 dr cr cash 1400 13. please show the ledger for the salary payable account at july 12, after the journal entry in question 12 has been posted to the ledger, and please show the balance.

Answer

Brief Explanations:

  1. Adjusting entries are needed to match revenues and expenses to the accounting period in which they occur. Even if no cash has left the business, Janet has provided services in this period, so an expense must be recognized.
  2. Debiting Salary Expense increases the expense, and crediting Salary Payable creates a liability as the salary is owed but not yet paid.
  3. An accrual entry records an expense or revenue when it is incurred or earned, not when cash is exchanged. Here, the salary expense is recognized although cash payment is future - hence an accrual.
  4. The matching principle in accrual accounting requires that expenses be matched with the revenues they help generate in the same accounting period. The salary expense is matched to the period in which Janet worked.
  5. The Salary Payable ledger has a credit entry of $200 on June 30 as a liability is created for the unpaid salary.
  6. When Janet is paid on July 12, Cash is credited (decrease in asset) and the liability (Salary Payable) is debited to reduce it. The full entry is Dr Salary Payable $1,400; Cr Cash $1,400.
  7. Before the July 12 entry, Salary Payable has a credit balance of $200. After posting the July 12 entry, the debit of $1,400 reduces the credit balance. The new balance is $200 - $1,400=-$1,200 (assuming no other transactions in Salary Payable, which means there may be an error as it should not be negative in a normal scenario, likely more salary - related transactions are missing). The ledger would show: | Date | Debit | Credit | Balance | | ---- | ---- | ---- | ---- | | June 30 | | $200 | $200 (credit) | | July 12 | $1,400 | | $1,200 (debit) |

Answer:

  1. To match expenses to the accounting period as Janet has provided services.
  2. Dr Salary Expense $200; Cr Salary Payable $200
  3. Because it records an expense before cash payment, following the accrual concept.
  4. Matching principle.
  5. | Date | Debit | Credit | | ---- | ---- | ---- | | June 30 | | $200 |
  6. Dr Salary Payable $1,400; Cr Cash $1,400
  7. | Date | Debit | Credit | Balance | | ---- | ---- | ---- | ---- | | June 30 | | $200 | $200 (credit) | | July 12 | $1,400 | | $1,200 (debit) |