10.13 -cambridge

[LFTM]

So in exercise 10.13 it asks to calculate total cash paid to employees during march 2010.

The pre adjustment trial balance shows 9000 in wages as at 31 march 2010.
Also: on feb 28 2010, accrued wages was 310. As at 31 march 2010, 360 was owing to employees in unpaid wages. The next payment of 1600 for wages is due April 2 2010.

so what i did was add 9000 and 310, but apparently my answer is wrong according to the answer book. They added 9000 and 310 then deducted 360. Why did they deduct 360, isn't the pre adjustment figure excluding the accrued wages?

TIA

[Aqualim]

Good pick-up,
Turns out it was a mistake. It's assuming the 9000 represents a post-adjustment figure by subracting the 360, when really it should be 9000+310=9310

[Yitzi_K]

OMG my teacher and a few of my classmates were arguing on this exact point for like half an hour today. And yeh the conclusion was that it was a mistake, like Aqualim said, they've already done the BDA to get the figure of 9000, but it's supposed to be a pre-adjustment trial balance.

[davyp3]

the book is correct, the question asks for the total amount of cash paid during the reporting period

9000 is the pre-adjusted figured
hence on balance day you settle the accrued wages making it 9000+310

and hence you have not paid 360, you minus it. 360 is not added because it is accured and hasnt resulted in actual cash paid.

hence

9000+310-360=8950

not a great explaination, but maybe others can lend me a hand

[Aqualim]

the book is correct, the question asks for the total amount of cash paid during the reporting period

9000 is the pre-adjusted figured
hence on balance day you settle the accrued wages making it 9000+310

and hence you have not paid 360, you minus it. 360 is not added because it is accured and hasnt resulted in actual cash paid.

hence

9000+310-360=8950

not a great explaination, but maybe others can lend me a hand

How can you take away the 360 if the post adjustment hasn't been made yet. By deducting the 360, you are assuming the 360 has already been reported as an expense. Which it hasn't as this is pre-adjustment, which is before the following BDA has been made;

DR Wages Expense 360
CR Accrued Wages Expense 360

So yeah the 9000 is a bit confusing.

[davyp3]

the post adjustment is the balance day adjustment
at the end of march, you have 9000 in the expense account
you minus 360 as in has not been paid in cash as of yet.(the question asks for total cash paid).

Then you add 310 to the 9000 as you must settle the previous accrued liability of 310.

the payment of 310 will not be added in the 9000 expense account as it falls under a different reporting period.

again, i reiterate that my explanations are not the greatest.