Answer :
The correct journal entry to record the weekly salaries paid by Buster Industries is to debit Salary Expense for $38,050 and to credit Cash for the same amount, assuming the salaries are paid immediately and not accrued. Thus none of the options (1 or 2) are correct.
When Buster Industries pays its weekly salaries of $38,050, the transaction should be recorded in the accounting books appropriately. Given that the payment is for a five-day work period, the transaction reflects the payment of earned salaries, which is an expense for the company.
Therefore, the transaction should be recorded by debiting Salary Expense and crediting Cash or Salaries Payable, depending on whether the salaries are being paid immediately or are accrued.
In this case, since it's a weekly payment, it is likely that the transaction will be recorded on Friday when the payment is made. The correct journal entry would be to debit Salary Expense for the full amount of the weekly salaries, which is $38,050, because this amount reflects the total expense incurred by the company for that week. Conversely, you would credit Cash for the same amount, reflecting the outflow of cash from the company's accounts.
Therefore, none of the options provided (1 or 2) are correct. Instead, it should be recorded as: Debit Salary Expense, $38,050; Credit Cash, $38,050 (assuming salaries are paid in cash and not accrued). Thus none of the options (1 or 2) are correct.
