Assume that no reversing entries are made by this firm. If wages of $12 400 were accrued by it at the end of the year and the first payment of wages in the subsequent year was $110 500 how would this payment be recorded?
A) Debit salaries payable $12 400; debit salaries expense $98 100; credit cash $110 500
B) Credit salaries payable $12 400; debit salaries expense $122 900; credit cash $110 500
C) Debit salaries payable $12 400; debit salaries expense $110 500; credit cash $122 900
D) Debit salaries expense $98 100; credit cash$98 100

Question

Quizplus · Accepted Answer

The payment of $110,500 would first address the accrued wages of $12,400 (debit salaries payable to remove the liability), and the remainder ($98,100) would be recorded as salaries expense for the current period. The total payment made is then credited to cash, reflecting the cash outflow of $110,500.

Assume That No Reversing Entries Are Made by This Firm