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Accounting for employee salaries involves journal entries for salaries expense and salaries payable. When employees are owed money, salaries expense is debited and salaries payable is credited. This reduces net income on the income statement and increases liability on the balance sheet. Payroll taxes, union dues, and other deductions must also be accounted for, including federal income tax withholding. Payments to employees result in debiting salaries payable and crediting cash.
