Alan is recording payroll that was processed outside of QuickBooks. Which of the following journal entries correctly records the payment of employee wages?

• A. Debit Payroll Tax Expense; Credit Wages Expense
• B. Debit Wages Expense; Credit Cash
• C. Debit Wages Payable; Credit Wages Expense
• D. Debit Cash; Credit Wages Expense

Answer: (B)

Verified step by step guidance

1. Understand the nature of the transaction: Alan is recording payroll processed outside of QuickBooks, which involves paying employee wages. This means the journal entry should reflect the reduction in cash and the recognition of wages expense.
2. Recall the accounting principle: Expenses are debited to increase their balance, as they reduce equity. Cash is credited to decrease its balance, as it represents an outflow of funds.
3. Analyze the options provided: The correct journal entry should debit Wages Expense (to record the expense incurred) and credit Cash (to reflect the payment made).
4. Eliminate incorrect options: For example, 'Debit Payroll Tax Expense; Credit Wages Expense' is incorrect because payroll tax expense is not the same as wages expense. Similarly, 'Debit Wages Payable; Credit Wages Expense' is incorrect because wages payable is a liability account, not relevant here.
5. Select the correct journal entry: Based on the analysis, the correct journal entry is 'Debit Wages Expense; Credit Cash,' as it properly reflects the payment of employee wages.