Which of the following best describes how a deduction from an employee's paycheck should be recorded in the employer's accounting journal?

• A. Debit Salaries Payable; Credit Salaries Expense
• B. Debit Cash; Credit Salaries Payable
• C. Debit Salaries Expense; Credit Cash
• D. Debit Salaries Expense; Credit Various Payable Accounts (such as Taxes Payable, Insurance Payable)

Answer: (D)

Verified step by step guidance

1. Step 1: Understand the context of the problem. The question is asking how deductions from an employee's paycheck should be recorded in the employer's accounting journal. Deductions typically include items such as taxes, insurance, and other withholdings.
2. Step 2: Recall the accounting principle that expenses incurred by the employer, such as salaries, are recorded as a debit to Salaries Expense. This reflects the cost of compensating employees.
3. Step 3: Recognize that deductions from the employee's paycheck are liabilities for the employer, as these amounts are owed to third parties (e.g., government for taxes, insurance companies). These liabilities are recorded as credits to Various Payable Accounts, such as Taxes Payable or Insurance Payable.
4. Step 4: Note that the employer does not directly credit Cash for these deductions at this stage because the deductions are not yet paid out. Instead, they are recorded as payables until the employer remits the amounts to the respective entities.
5. Step 5: Summarize the journal entry: Debit Salaries Expense to reflect the total salary cost, and Credit Various Payable Accounts to record the deductions owed to third parties.