Would employee wages be an example of a decrease of an asset and a decrease of a liability? If so what would be the journal entry?

Thanks.

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Originally Posted by swthrt

Would employee wages be an example of a decrease of an asset and a decrease of a liability? If so what would be the journal entry?

Thanks.

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The only way I can see it being just those 2 is to decrease cash ( an asset) and also decrease accrued salaries/ payroll (a liability) Assuming that the wages had been accrued.

Perhaps someone else reads more into this than I do

Scenario 1:
Let's say your employees have worked for you for 2 weeks and now you must pay them $400 that you owe them.

The JE would be:
Dr. Wages Expense 400 (increasing an expense)
Cr. Cash 400 (decreasing an asset).


Scenario 2:
Let's say you owe your employees the same $400. However you must prepare your financial statements today, and are not paying them until next week.

Your JE would be:
Dr. Wages Expense 400 (increasing an expense)
Cr. Wages Payable 400 (increasing a liability).

Next week when you pay them, your JE would be:
Dr. Wages Payable 400 (decreasing a liability)
Cr. Cash 400 (decreasing an asset)