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Journal Entry query

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7 Points Posted on 13 June 2021

Which entry is correct?

Salary A/c ... Dr
To Bank A/c
OR
Salary A/c .... Dr
To Salary Payable A/c
Salary Payable A/c ..... Dr
To Bank A/c

Why do we need to first Due the expense and then Pay it, for what kind of items we make the same treatment?

Please solve.

Replies (5)

Quick Summary

This discussion clarifies the correct journal entry for salary payments. It explains that the entry 'Salary A/c Dr To Salary Payable A/c, then Salary Payable A/c Dr To Bank A/c' is correct under the accrual basis of accounting. This method is used to recognise expenses when they are incurred, rather than when cash is paid, and is common for items like salaries and wages.