Journal Entry of Paid Salary

When a company pays salaries to its employees, it is necessary to record this transaction in the accounting books. This journal entry helps in maintaining accurate financial records and provides a clear picture of the company's expenses. The journal entry for paid salary involves multiple accounts and is recorded as follows:

1. Debit Salary Expense Account:
The first step is to debit the "Salary Expense" account. This account represents the total amount of salaries paid to employees during a specific period. It is an expense account and increases the company's overall expenses.

2. Credit Cash or Bank Account:
The next step is to credit the "Cash" or "Bank" account. This account represents the company's cash or bank balance and decreases as the money is paid to employees as salaries. Alternatively, if the salaries are paid through a bank transaction, the "Bank" account is credited.

Example:
Let's consider an example to illustrate the journal entry of paid salary. Suppose a company, XYZ Ltd., paid $10,000 as salaries to its employees.

The journal entry would be as follows:

Date: [Date of Salary Payment]

Account Debit Credit
Salary Expense $10,000
Cash (or Bank) $10,000

In this example, the "Salary Expense" account is debited with $10,000, representing the total salaries paid. The "Cash" (or "Bank") account is credited with $10,000, indicating the decrease in the company's cash balance due to the salary payment.

Summary:
The journal entry for paid salary involves debiting the "Salary Expense" account to record the expense incurred and crediting the "Cash" or "Bank" account to reflect the decrease in the company's cash balance. This entry helps in maintaining accurate financial records and tracking the company's expenses related to employee salaries.

Salary A/C. Dr.
To cash A/C