Question

Please explain this correcting jounral entry:

Debit Accrued Liability $100

Credit Employee Benefit Expense $100

This entry was to correct a payroll error. Can you please explain is this getting rid of an benefit expense it did not need? Or is this being entered in order toadd in a missed prior amount from somewhere along the way? Please explain what is happening with this journal enty,

Answer 1

This entry is reducing the employee benefit expense amount and the accrued liability at the same time.

A debit to accrued liability means that the liability amount is being reduced.

A liability may be reduced for a variety of reasons, if it is paid off or if it is felt to be in excess of desired amount etc.

A credit to employee benefit expense will go on to reduce the employee benefit expense incurred.

This entry may have been recorded to reduce the wrongly recorded employee benefit expense.