Question

During the current year, Hainzel Corp.'s income statement shows that the company accrued salary expense of 85,000; for the same period the salary payable balance decreased by 3,000. Cash paid for salaries is?

Answer 1

The cash paid for salaries by Hainzel Corp. is calculated by adding the accrued salary expense to the decrease in salary payable, which equals $88,000.

Step-by-step explanation:

The student's question asks how much cash was paid for salaries by Hainzel Corp. given that the company accrued salary expense of $85,000 and the salary payable balance decreased by $3,000 during the current year.

When a company accrues salary expense, it is recording the salaries owed to employees that have not yet been paid. The decrease in salary payable indicates that cash has been paid to reduce the amount owed. Therefore, to calculate the cash paid for salaries, you would add the decrease in salary payable to the accrued salary expense.

Cash Paid for Salaries = Accrued Salary Expense + Decrease in Salary Payable
= $85,000 + $3,000
= $88,000.

Thus, Hainzel Corp. paid $88,000 in cash for salaries during the current year.