If accrued salaries were recorded on December 31 with a credit to Salaries Payable, the entry to record payment of these wages on January 5 would include
A) A debit to Cash and a credit to Salaries Payable
B) A debit to Cash and a credit to Prepaid Salaries
C) A debit to Salaries Payable and a credit to Cash
D) A debit to Salaries Payable and a credit to Salaries Expense
E) No entry would be necessary on January 5

Question

Quizplus · Accepted Answer

Accrued salaries represent wages owed to employees that have not yet been paid. When they are recorded on December 31, Salaries Payable is credited because it is a liability account (meaning the company owes money to its employees for their work). When the company pays the employees on January 5, Cash is debited because it is an asset account (meaning the company is using its cash to pay the employees) and Salaries Payable is credited to reduce the liability. Therefore, the correct entry is a debit to Salaries Payable and a credit to Cash.

If Accrued Salaries Were Recorded on December 31 with a Credit