Given the following year-end adjusted balances for Cruz Company as of December 31, which of the following journal entries correctly records the payment of accrued salaries of \$5,000?

• A. Debit Salaries Expense \$5,000; Credit Cash \$5,000
• B. Debit Cash \$5,000; Credit Salaries Payable \$5,000
• C. Debit Salaries Payable \$5,000; Credit Salaries Expense \$5,000
• D. Debit Salaries Payable \$5,000; Credit Cash \$5,000

Answer: (D)

Verified step by step guidance

1. Step 1: Understand the concept of accrued salaries. Accrued salaries represent salaries that have been earned by employees but not yet paid by the company. These are recorded as a liability (Salaries Payable) on the balance sheet.
2. Step 2: Identify the correct accounts involved in the transaction. Since the company is paying off the accrued salaries, the Salaries Payable account (a liability) will be debited to reduce the liability, and the Cash account (an asset) will be credited to reflect the payment.
3. Step 3: Recall the journal entry format. A debit decreases liabilities or increases expenses, while a credit decreases assets or increases liabilities. In this case, debiting Salaries Payable reduces the liability, and crediting Cash reduces the asset.
4. Step 4: Write the journal entry. The correct journal entry to record the payment of accrued salaries is: Debit Salaries Payable \$5,000; Credit Cash \$5,000.
5. Step 5: Verify the logic of the entry. Ensure that the liability (Salaries Payable) is reduced by the payment and that the asset (Cash) is decreased by the same amount, maintaining the balance in the accounting equation.