ABC Grocers uses a separate checking account to pay their employees. The gross pay for the period was $850. However, after deductions were taken out, the net pay for the period was $790. The journal entry to record the issuance of payroll checks to their employees would include:
A)a credit to Salaries Payable for $850
B)a debit to Salaries Payable for $790
C)a debit to Salaries Payable for $850
D)a debit to Salaries Expense for $790

Question

Quizplus · Accepted Answer

The journal entry to record the issuance of payroll checks should include a debit to Salaries Expense and a credit to Cash for the amount of net pay, which is $790 in this case. Salaries Payable is used when recording wages that have been earned but not paid out yet, so it should not be credited in this scenario. The gross pay of $850 is irrelevant when recording the issuance of payroll checks, as it is used to calculate deductions and not the actual amount paid to employees.

ABC Grocers Uses a Separate Checking Account to Pay Their