on June $30,2023.$

On February $12$th$,2024$ the company and union reached an agreement which reflected wage increases for all factory employees. The agreement stated that all retroactive wage increases would be paid to factory employees on February $15,2024.$ The dollar amount of the retroactive wage increase that would be paid to employees was $$200,000.$ This amount is material for the company & had not yet been included in the financial results for the year ending $1/31/24.$

On March $15,2024,$ the accounting staff was in the process of finalizing the January $31$st$,2024$ financial statements. One of the staff accountants questioned if the retroactive wage increase should be included in the January $31$st$,2024$ financial statements.

Accounting Issue: Should the $$200,000$ retroactive wage increase to factory employees be included in the January $31,2024$ financial statements?

$1.$ Codification Reference:

$2.$ Your interpretation of the guidance:

Should the wage increases be included in the January $31,2024$ financial statements?

a$.$ Yes

b$.$ No

$3.$ Is a Journal Entry necessary?

a$.$ Yes

b$.$ No