The employees of Dew Drop Inn get paid every Friday for a 5-day workweek (Monday through Friday). The total payroll is 5,000 per day of work.
If the accounting period ends on Thursday of a given week, and the proper adjustment is made on Thursday, what will be the effect on the company's accounting system on Friday when the employees are paid for the week?
A) Decrease Cash by 25,000 and decrease shareholders' equity by recognizing Salaries expense for the same amount.
B) Decrease Cash by 25,000, decrease shareholders' equity by recognizing Salaries expense for 20,000 and decrease Salaries payable by 5,000.
C) Decrease Cash by 25,000, decrease shareholders' equity by recognizing Salaries expense for 5,000 and decrease Salaries payable by 20,000.
D) Decrease Cash by 5,000 and decrease shareholders' equity by recognizing Salaries expense for the same amount.
Question 2
Merchandise with an invoice price of 6,000 is purchased on September 2 subject to terms of 2/10, n/30, FOB destination. Freight costs paid by the seller totaled 200 . What is the cost of the merchandise if paid on September 12, assuming the discount is taken?
a. 6,120
b. 5,940
c. 6,090
d. 5,880
Fred Wilson, Drip Drop Plop.
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