Gamble Company adjusts its accounts at the end of each month. The following information has been assembled in order to prepare the required adjusting entries at December 31: (1) A one-year bank loan of $720,000 at an annual interest rate of 6% had been obtained on December 1. (2) The company pays all employees up-to-date each Friday. Since December 31 fell on Tuesday, there was a liability to employees at December 31 for two day's pay. Employees earn a total of $12,800 per week. (3) On December

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Question:

Gamble Company adjusts its accounts at the end of each month. The following information has been assembled in order to prepare the required adjusting entries at December 31: (1) A one-year bank loan of $720,000 at an annual interest rate of 6% had been obtained on December 1. (2) The company pays all employees up-to-date each Friday. Since December 31 fell on Tuesday, there was a liability to employees at December 31 for two day's pay. Employees earn a total of $12,800 per week. (3) On December 1, rent on the office building had been paid for three months. The monthly rent is $7,000. (4) Depreciation of office equipment is based on an estimated useful life of five years. The balance in the Office Equipment account is $12,360; no change has occurred in the account during the year. (5) All fees totaling $19,800 were earned during the month for clients who had paid in advance. How much is owed the employees for their wages

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Answer:$5,120Explanation:Workers are paid $12,800 per week (five days), since December 31 fell on a Tuesday, accrued wages payable will be equal to the wages proportional to two days: = ($12,800 per week / 5 days per week) x 2 days = $2,560 per days x 2 days = $5,120The appropriate journal entry should be:December 31st, wages payable:Dr Wages expense 5,120     Cr Accrued wages payable 5,120

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