How to Enter Salaries Payable in Accounting
"Salaries payable" refers to an obligation a company owes its employees for hours worked. Salaries payable exists as a liability account that increases when the account gets credited. A company encounters salaries payable when the company recognizes a salaries expense that has not been paid to employees of the business. This is known as accrued expense, because an expense is recognized that has not been paid.
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Instructions
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Calculate the salaries due. For instance, if a company pays $20,000 per day in salaries and it must recognize the expense for six days, the total salaries due equals $120,000.
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Record the date of the transaction. Enter the day and month when the company incurs the salaries expense.
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Write a debit in the salaries expense account for the applicable amount. For instance, a company with $120,000 in accrued salaries must debit salaries expense for $120,000. This increases the company’s expense, which takes away from the company’s net income. Salaries expense exists as an income statement account that has a normal debit balance, which means a debit increases the amount in a company’s salaries expense account.
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Draft a credit to salaries payable. The credit to salaries payable must match the debit to the salaries expense account. For instance, a company that debits salaries expense for $120,000 must credit salaries payable for $120,000. This increases a company’s obligation by $120,000 because salaries payable is a liability account that has a normal credit balance. Salaries payable appears on a company’s balance sheet along with other liabilities due within one year.
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