Questions: To record depreciation on equipment. B. Each Monday, Perryville Welding Services pays employees for the previous week's work. The amount of weekly payroll is 7,000 for a seven-day workweek (Monday to Sunday). This year, December 31 falls on Thursday.

To address the question regarding the recording of payroll expenses for Perryville Welding Services, we need to consider the accrual accounting principle, which requires expenses to be recorded in the period they are incurred, regardless of when the payment is made.

Given:

• The weekly payroll is $7,000 for a seven-day workweek (Monday to Sunday).
• December 31 falls on a Thursday.

Steps to calculate and record the payroll expense:

1. Determine the daily payroll expense: \[ \text{Daily payroll expense} = \frac{\$7,000}{7} = \$1,000 \]

2. Calculate the payroll expense incurred from Monday to Thursday (December 28 to December 31): \[ \text{Payroll expense for 4 days} = 4 \times \$1,000 = \$4,000 \]

3. Journal Entry on December 31:

   • Since the payroll for these days has been incurred but not yet paid, it should be recorded as a liability (accrued expense).

   Journal Entry: \[ \begin{array}{|c|c|c|c|} \hline \text{Date} & \text{Account and Explanation} & \text{Debit} & \text{Credit} \\ \hline \text{Dec. 31} & \text{Salaries Expense} & \$4,000 & \\ \hline & \text{Salaries Payable} & & \$4,000 \\ \hline \end{array} \]

Explanation:

• Salaries Expense (Debit): This account is debited to recognize the expense incurred for the work done by employees from Monday to Thursday.
• Salaries Payable (Credit): This account is credited to reflect the liability that the company owes to its employees for the work performed during this period.

This entry ensures that the financial statements accurately reflect the expenses incurred during the accounting period, adhering to the matching principle of accounting.