The Journal Entry to Record Payroll

question 85

Multiple Choice

The journal entry to record payroll:

• A) debits salary expense and credits salary payable for the net pay.
• B) debits salary expense and credits salary payable for the gross pay.
• C) debits salary expense for the gross pay and credits salary payable for the net pay.
• D) debits salary expense for the net pay and credits salary payable for the gross pay.

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Definitions:

Tax-exempt Bonds

Bonds issued by governmental entities that do not require the owners to pay taxes on the interest earned from these bonds.

Book Income

The income or loss reported by a business for financial reporting purposes, not necessarily reflective of the taxable income according to tax regulations.

Subchapter S Stock

Refers to shares of corporations that elect to pass corporate income, losses, deductions, and credits through to their shareholders for federal tax purposes.

Capital Contributions

The funds or resources contributed by owners or shareholders for the use in furthering the business or enterprise.