Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

2. Transaction Analysis

Journal Entries: Debits and Credits

Financial Accounting

2. Transaction Analysis

Journal Entries: Debits and Credits

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Multiple Choice

Given the following year-end adjusted balances for Cruz Company as of December 31, which of the following journal entries correctly records the payment of accrued salaries of $5,000?

Debit Salaries Expense $5,000; Credit Cash $5,000

Debit Cash $5,000; Credit Salaries Payable $5,000

Debit Salaries Payable $5,000; Credit Salaries Expense $5,000

Debit Salaries Payable $5,000; Credit Cash $5,000

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Verified step by step guidance

Step 1: Understand the concept of accrued salaries. Accrued salaries represent salaries that have been earned by employees but not yet paid by the company. These are recorded as a liability (Salaries Payable) on the balance sheet.

Step 2: Identify the correct accounts involved in the transaction. Since the company is paying off the accrued salaries, the Salaries Payable account (a liability) will be debited to reduce the liability, and the Cash account (an asset) will be credited to reflect the payment.

Step 3: Recall the journal entry format. A debit decreases liabilities or increases expenses, while a credit decreases assets or increases liabilities. In this case, debiting Salaries Payable reduces the liability, and crediting Cash reduces the asset.

Step 4: Write the journal entry. The correct journal entry to record the payment of accrued salaries is: Debit Salaries Payable $5,000; Credit Cash $5,000.

Step 5: Verify the logic of the entry. Ensure that the liability (Salaries Payable) is reduced by the payment and that the asset (Cash) is decreased by the same amount, maintaining the balance in the accounting equation.