An overpayment was discovered in computing and paying the wages of a West Heights Country Club employee. When the employee returns the amount of the overpayment, West Heights should make which of the following entries?
A) Cash, debit; Wages Expense, credit
B) Wages Payable, debit; Wages Expense, credit
C) Wages Expense, debit; Cash, credit
D) Wages Expense, debit; Wages Payable, credit

Question

Quizplus · Accepted Answer

When the employee returns the overpayment, the company receives cash, so Cash is debited. Since the overpayment was previously recorded as an expense, reversing that portion of the expense by crediting Wages Expense corrects the overstatement of the expense.

An Overpayment Was Discovered in Computing and Paying the Wages