Junkman Autos uses a separate checking account to pay their employees. The gross pay for the period was $1,000. However, after deductions were taken out, the net pay for the period was $820. The journal entry to record the issuance of payroll checks to their employees is:

Question

Quizplus · Accepted Answer

The journal entry should reflect the payment made to employees. The Salaries Payable account should be credited for the amount of net pay ($820) and the Cash account should be debited for the same amount ($820). Therefore, Option D is the correct answer. Option B records the gross pay and does not reflect the deductions. Option A records the expense only and does not reflect the payment made. Option C records only the payment made, but does not reflect the liability created by gross pay.

Junkman Autos Uses a Separate Checking Account to Pay Their