Clean Dirt,Inc.had $8,000 of salaries payable at December 31,2010.During 2011,Clean Dirt's salary expense was $60,000.At December 31,2011,Clean Dirt's balance sheet showed $5,000 of salaries payable.How much did Clean Dirt pay in cash for salaries during 2011?
A)$60,000
B)$65,000
C)$63,000
D)$57,000

Question

Quizplus · Accepted Answer

To determine the amount Clean Dirt paid in cash for salaries during 2011, we need to calculate the change in the Salaries Payable account:

Salaries Payable at Dec. 31, 2010: $8,000
Salary Expense for 2011: $60,000
Salaries Payable at Dec. 31, 2011: $5,000

Change in Salaries Payable: $5,000 - $8,000 = -$3,000

A negative change in Salaries Payable means that the company paid more in salaries than it accrued in Salary Expense. To calculate the actual cash paid for salaries, we need to add the decrease in Salaries Payable to the Salary Expense:

Cash paid for salaries = Salary Expense + Decrease in Salaries Payable
Cash paid for salaries = $60,000 - $3,000
Cash paid for salaries = $57,000

Therefore, the best choice is C) $63,000.