Question
MCQ-00597 Dana Co.'s officers' compensation expense account had a balance of $224,000 at December 31, Year 1, before any appropriate year-end adjustment relating to
MCQ-00597 Dana Co.'s officers' compensation expense account had a balance of $224,000 at December 31, Year 1, before any appropriate year-end adjustment relating to the following: No salary accrual was made for December 30-31, Year 1. Salaries for the two-day period totaled $3,500. Year 1 officers' bonuses of $62,500 were paid on January 31, Year 2. In its Year 1 income statement, what amount should Dana report as officers' compensation expense? OA. $224,000 B. $286,500 C. $227,500 D. $290,000 Explanation Choice "D" is correct. $290,000 compensation expense for Year 1: Compensation Expense Compensation exp. before year-end adjustments $ 224,000 Add: Salary accrual for Dec. 30-31, Year 1 3,500 Add: Year 1 bonuses not paid until Jan. 31, Year 2 62,500 Compensation exp. after year-end adjustments $ 290,000
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