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.
can someone tell me if this is the correct answer??
Nov. 1 Salaries Payable 1,400
Salaries Expense 1,400
The balances after posting the reversing entry are Salaries Expense (Cr.) $1,400 and Salaries Payable $0.
Post one or two new concepts you learned from each of the PhxKlips
Complete E4-4 on p. 177
To check if the given answer is correct, let's understand the concept of reversing entries first.
Reversing entries are made at the beginning of a new accounting period to reverse certain adjusting entries made during the previous period. They are typically used for accruals, such as accrued expenses or revenues, to simplify the recording process in the new period.
In this case, the original accrued expense adjusting entry was made on October 31st for salaries in the amount of $1,400. The purpose of the reversing entry on November 1st is to reverse this accrued expense so that it does not carry over into the new accounting period.
Based on the information provided, the reversing entry should be as follows:
Nov. 1:
Debit Salaries Expense: $1,400
Credit Salaries Payable: $1,400
The effect of this reversing entry is to debit the Salaries Expense account and credit the Salaries Payable account for the same amount, $1,400. This essentially cancels out the original accrual.
After posting the reversing entry, the balances in Salaries Expense and Salaries Payable should be as follows:
Salaries Expense: $1,400 (credit)
Salaries Payable: $0 (balance zeroed out)
Therefore, based on this explanation, the given answer is correct.