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Accounting for salaries paid to employees involves journal entries that debit salaries expense and credit salaries payable when employees are owed money. Salaries expense reduces net income, while salaries payable increases current liabilities on the balance sheet. Payroll taxes, union dues, and other deductions must also be accounted for. When the employer pays employees, salaries payable is debited and cash is credited. There are additional complexities such as federal income tax withholding that need to be considered.
