Question

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:

Answer 1

Answer:

Debit Payroll expense $850

Credit Cash/Bank Account $790

Credit Deduction (liability) $60

Being entries to record payroll expense

Explanation:

Given;

Gross pay for the period = $850

After deductions were taken out, the net pay for the period = $790

Therefore, amount deducted = $850 - $790

                                                  = $60

The journal to record this would include;

Debit Payroll expense $850

Credit Cash/Bank Account $790

Credit Deduction (liability) $60

Being entries to record payroll expense

On remittance of the deduction to the appropriate party

Debit Deduction (liability) $60

Credit Cash/Bank Account $60