McFriend has 50 employees who are paid an average of $176 per day. The company allows 15 paid vacation days per year. Assume that McFriend Inc. has recorded a liability for compensated absences according to its vacation policy. For the August 31 payroll, McFriend pays its employees $120,000 for time worked and $10,000 for vacation taken.

Required:

Prepare the journal entry to record McFriends August 31 payroll.

CHART OF ACCOUNTS

McFriend Inc.

General Ledger

	ASSETS
111	Cash
121	Accounts Receivable
141	Inventory
152	Prepaid Insurance
181	Equipment
189	Accumulated Depreciation

	LIABILITIES
211	Accounts Payable
222	Liability for Compensated Absences
231	Salaries Payable
250	Unearned Revenue
261	Income Taxes Payable

	EQUITY
311	Common Stock
331	Retained Earnings

	REVENUE
411	Sales Revenue

	EXPENSES
500	Cost of Goods Sold
511	Insurance Expense
512	Utilities Expense
521	Salaries Expense
532	Bad Debt Expense
540	Interest Expense
541	Depreciation Expense
559	Miscellaneous Expenses
910	Income Tax Expense

Prepare the journal entry to record McFriends August 31 payroll.

GENERAL JOURNAL

Score: 12/37

	DATE	ACCOUNT TITLE	POST. REF.	DEBIT	CREDIT
1
2
3

All rows are used.