@Namstut
Here is my issue with the employee advance question. Let me make up the following scenario
12/31/Year 1 12/31/Year 2
Employee Advances $ 10,000 $0
Accrued Salaries Payable 20,000 ?
Salaries Expense During the Year 20,000
Salaries Paid During the Year (Gross) 10,000
In year 2, Accrued Salaries Payable is?
now, in the previous question, they are purely taking beg accrual, adding salary expense, and deducting salaries paid to arrive at ending accrued salaries payable. If you did that in this question, ASP would be $30,000. Now see the J/Es below
Yr 1 Advance Payment Entry
Salary Advance 10,000
Cash 10,000
Yr 2 Journal
Salary Expense 20,000
Salary Advance yr 1 reversal 10,000
Salary Payable 10,000
Yr 2 Payment
Salary Payable 10,000
Cash 10,000
Now you had a salary expense of 20,000 but 10,000 of it was covered by the salary advance reversal that is taken out of the employees check. So while only 10,000 of salary was paid during the year, the entire expense is covered and therefore the accrual would not increase, it would stay at 20,000. Am I wrong with this?
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