At October 31, Nathan Company made an accrued expense adjusting entry of $1,400
for salaries. Prepare the reversing entry on November 1, and indicate the balances in Salaries
Payable and Salaries Expense after posting the reversing entry.
To prepare the reversing entry for the accrued expense of $1,400 for salaries made on October 31, on November 1, you would need to debit Salaries Payable and credit Salaries Expense.
Reversing Entry:
- Debit Salaries Payable: $1,400
- Credit Salaries Expense: $1,400
After posting the reversing entry, the balances in Salaries Payable and Salaries Expense will be as follows:
- Salaries Payable: $0 (No balance remaining as the expense has been paid and reversed)
- Salaries Expense: $1,400 (The expense has been reversed, so the balance remains unchanged)
To prepare the reversing entry on November 1, we need to reverse the initial accrual entry made on October 31. Since the initial entry increased the Salaries Expense and Salaries Payable accounts, the reversing entry needs to decrease these accounts.
The reversing entry would be as follows:
November 1:
Salaries Expense (debit) - $1,400
Salaries Payable (credit) - $1,400
After posting the reversing entry, the balances in the Salaries Payable and Salaries Expense accounts would be as follows:
Salaries Payable: The initial accrual entry on October 31 increased the Salaries Payable account by $1,400. The reversing entry on November 1 decreases the Salaries Payable account by $1,400. Therefore, the balance in the Salaries Payable account after posting the reversing entry would be zero.
Salaries Expense: The initial accrual entry on October 31 increased the Salaries Expense account by $1,400. The reversing entry on November 1 decreases the Salaries Expense account by $1,400. Therefore, the balance in the Salaries Expense account after posting the reversing entry would also be zero.