November 13, 2020 at 7:22 pm #3155712
Below is an AICPA practice test question for FAR. I was able to figure out why I got other MCQs incorrect, but this one has stumped me. Could someone please assist? The correct answer is $22,000.
Lind Co.'s salaries expense of $10,000 is paid every other Friday for the 10 workdays then ending. Lind's employees do not work on Saturdays and Sundays. The last payroll was paid on June 18. On Wednesday, June 30, the month-end balance in the salaries expense account before accruals was $14,000. What amount should Lind report as salaries expense in its income statement for the month ended June 30?
$18,000November 13, 2020 at 9:16 pm #315579923Participant
@Road2CPA, given that the 18th is a Friday (and 30th a Wednesday), you can determine which days are Monday – Friday. The month begins on Tuesday the 1st. For this June there are 22 working days (I sorted it out with pen/paper, but look at Sept 2020 for a month that corresponds to the same M-F dates). If $10k is paid every other Friday, each day is $1000 in salaries. 22 days x $1000 = $22,000.November 13, 2020 at 9:52 pm #3155826
Another way to approach it – the journal entry is debit payroll expense, credit accrued payroll liability.
Problem states they last recorded payroll expense (paid) on Friday June 18. We know the month ends on Wednesday 30th. So it's another Mon->Fri + Mon->Weds = 8 working days. As mentioned above, $1,000 should be accrued per day. 8 days left x $1000 = $8,000 should be added to the previously accrued 14k (thru June 18) = $22,000.November 13, 2020 at 11:05 pm #3155853
Thank you both! Looks like I should have taken my time and wrote out the days as you both have suggested. I guess I was originally trying to calculate the days in my head and included weekends because I never even got to any one of the 4 choices. Once I wrote out the days as @23 suggested, I mentally processed it in the manner that @water described.
I take FAR tomorrow afternoon and did the AICPA practice exam to get a feel of any last minute things I should touch up on, so thank you again for providing a reply so quickly. I hope I get a similar question on the exam because that will at least be one that I'll remember 🙂November 14, 2020 at 10:34 pm #3156546November 15, 2020 at 11:37 am #3156837
Surprisingly it wasn’t as bad as I expected. It was challenging, but I think I expected the worse. The second testlet definitely got harder to the point that I panicked a bit. It got harder in a sense of the majority of the questions required some calculations versus maybe 5 or 6 in the first testlet. I felt confident in most of my calculations, but some where true guesses in that once I did what I thought was the right calculation, if I saw my answer as an option, I just selected it and moved on without going back to it. The SIMs were challenging in a sense of being lengthy and having a lot of exhibits, but once I took a breath and tackled each exhibit one at a time, I was okay. There were many SIMs where I definitely took some guesses because I knew one part, but not the other. For example, with journal entries, there were some where I knew the accounts for the journal entry, but wasn’t confident in my calculation, or vice versa. Then there was 1 SIM where I had no clue, but took a decent guess based on the little bit that I did know. Also, I found myself getting exhausted after like the 3rd SIM because of the length of each, but I finished with around 15 minutes left. Overall, I don’t feel as bad as I felt after I took REG which almost had me in tears, so I’m hoping for the best at this point.November 15, 2020 at 4:08 pm #3157134
Sounds like you passed. I felt the MCQ were difficult and not what I expected. But I remember there were some freebies mixed in. The first 3 SIMs also gave me a challenge and were unexpected. At that point I started to get nervous. But I actually felt that the remaining SIMs were much nicer, and finished the exam with 25 mins left. Despite this I remember leaving and thinking of a few errors I made. Even the SIMs that are guessed on, it is not truly a random guess. If you are able to make your choice based on what you know then you probably have a higher chance than a 50/50 guess.November 15, 2020 at 6:16 pm #3157278
I agree my first 3 SIMs were a challenge. I think that’s what made me panic, and exhausted me at the same time.
I see you just took your last exam as well. We’ll be getting our results in same score release. The “eyeball” trick worked for me last time, I’m hoping it works again this time as well. My goal was to be done before the holidays.November 16, 2020 at 12:04 pm #3157746monikerncParticipant
Back to original question. The most time efficient method to solve this during an exam would be to add 14 days, for the 2 week period, to June 18 (14+18=32.) That takes you to 2 days beyond the end of the month. So you will expense for 8 of 10 days, 80%*$10,000=$8000, and add it to the $14,000 that was expensed for the first pay period of the month $14,000+$8,000=$22,000 balance as of June 30.
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