Hi,

If the wages earned by employees monthly were $8000, and for example in May, only $6000 has been paid at the end of the month.

In the income statement, is $6000 or $8000 going to show as en expense?

Thanks.

The gross wages (8000) will be recorded as an expense in the income statement. Although the amount paid to employees is 6000 only but there are other deductions that will be paid by the company such as payroll taxes and social security taxes and others.

For example if an employee gross salary is $2,000 and $200 should be paid for payroll taxes the entry will be as follows

Dr. Wages expense 2,000
Cr. Taxes Payable 200
Cr. Bank 1,800

Got it :)
Thanks a bunch.



The gross wages (8000) will be recorded as an expense in the income statement. Although the amount paid to employees is 6000 only but there are other deductions that will be paid by the company such as payroll taxes and social security taxes and others.

for example if an employee gross salary is $2,000 and $200 should be paid for payroll taxes the entry will be as follows

Dr. Wages expense 2,000
Cr. Taxes Payable 200
Cr. Bank 1,800