This entry usually includes debits for the direct labor expense, salaries, and the company's portion of payroll taxes. Credit wages and salaries payable for the same amount as the debit in Step 3, as credits must equal debits. Debit the salary expense account for the total amount of the payroll. 0 0 1 0 Salaries Expense is an expense on the Profit and Loss Statement (or Income Statement). Also, losses included in the expenses category. Salaries Payable is a liability on the Balance Sheet. Salary A/c Dr To Cash A/c Cr Salary is debit- Because it is an expense Cash is credit- Because it is going out. The first salary will be paid on January 10, 20×2. If the company debits wages and salaries expense for $7,500, it must credit wages and salaries payable for $7,500. Difference between the salary expense and salary payable: The difference between the salary expense and salary payable is the same that lies between an expense account and a liability account. If one is looking at this from the perspective of a store where debits could be how money comes into the store's account and credit is what has to be paid out to customers, then the employee salaries would also be something going out of the account for the store. Wages and salaries both are expenses to the company and like all expenses normal debit balance these accounts also have debit balance as their normal balance. Step 2. Credit the federal income tax and state income tax payable accounts for the total amount withheld from employee paychecks. If you owe employees money but have not paid them yet, that's recorded as a debit to Salaries Expense and a credit to Salaries Payable. A journal entry with a debit to Salaries and Wages Expense and a credit to Salaries and Wages Payable for $800 should be recorded. Expenses consume assets. The normal balance of expenses is a debit balance. Monthly salary is $6,000. Increase in salaries payable (liability): credit 3. Common expenses include wages expense, salary expense, rent expense, and income tax expense. Expenses increase with debits and decrease with credits. Swift Company paid $18,650 in advance for six months of rent. (That is being paid to the manager) Remember the golden rules and it will be easier for you to solve. For example, if the total payroll for the period equals $43,000, debit "Salary Expense" for $43,000. The balance of this account increases with credit and decreases with debit entries. The week’s worth of unpaid salaries and wages is actually a liability that you will have to pay in the future even though you haven’t yet spent the cash. There will also be credits to a number of accounts, each one detailing the liability for payroll taxes that have not been paid, as well as for the amount of cash already paid to employees for their net pay .