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Chad Oberg
Chad Oberg, Certified Public Accountant (CPA)
Category: Tax
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Experience:  10 + years of accounting and tax experience, financial statements and business planning
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Q - If a company recorded accrued salaries expense of $500

Resolved Question:

Q:- If a company recorded accrued salaries expense of $500 at the end of its fiscal year, what reversing entry could be made? when would it be made?
Submitted: 7 years ago.
Category: Tax
Expert:  Chad Oberg replied 7 years ago.



Generally, if the accrued salaries expense is calculated at the end of each period (whether at the end of year or monthly), you will clear it on the next payroll. For instance at 12/31/09 you would have booked something such as the following:


Salary Expense $500

Accrued Salaries Expense $500


On the next payroll, when you pay the salary expense of that associated period, you clear the accrual. Such as the following (assume the total payroll including the year-ending accrual is $2,000):


Salary Expense $1,000

Accrued Salary Expense $500

Cash $2,000


This is a simplified way off looking at payroll journal entries. Many companies run separate accounts for tax expense and accrued taxes, etc.....


Note: If you already have booked the next payroll. You will need to clear the accrued expense against payroll expenses since the payroll expenses account would be overstated.







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