An employee earns $1 000 a week and the following deductions are made: income tax $150, superannuation $90 and union dues $20. The journal entry to record this transaction would include:
A) DR Wages expense $740
B) CR Wages payable $1 000
C) DR Wages expense $1 000
D) None of the above

Question

Quizplus · Accepted Answer

The correct journal entry to record the transaction includes debiting Wages Expense for the total amount earned by the employee ($1,000), not just the net pay after deductions. This is because the expense recognized by the company is the total cost of employing the worker, which includes gross wages before any deductions.

An Employee Earns $1 000 a Week and the Following