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25 March, 07:45

On January 9, a company pays $6,200 for salaries, of which $1,100 was reported as Salaries and Wages Payable on December 31. Indicate all accounts increased or decreased as well as dollar amounts when payment occurs?

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  1. 25 March, 08:10
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    Accrued Salaries and Wages

    Salaries

    Cash

    Explanation:

    On January 9, a company pays $6,200 for salaries, of which $1,100 was reported as Salaries and Wages Payable on December 31.

    Dr Salaries ... 5,100

    Dr Accrued Salaries ... 1,100

    Cr Cash ... 6,200

    The unpaid salaries for December would have been posted to 'Accrued Salaries' account, while the remaining fraction for January will be in the salary account.

    Hence with this payment, the accrued salaries and wages will be debited which implies a reduction (to the tune of 1,100) since it is a liability account that has a credit balance. Cash/Bank is also reducing to the tune of 6,200 because money is being paid out.

    Salary expense is increasing because more of the expense is being incurred.
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