Salary Payable

Salary payable refers to the liability of the company towards its employees against the amount of salary of a period that became due but has not been paid yet to them by the company and it is shown in the balance of the company under the head liability.

Salary Payable Definition

Salary payable can be attributed to the type of payroll journal entry that shall be used to record in the books of account the compensation which shall be paid to the employees. It is usually included in the current liabilities on the balance sheet as it is expected to be paid within one year.

Below is the basic journal entry that shall be passed in the books of account for accruing the salary payments.

Salary Payable 1

And upon payment of salary, below journal entry shall be made.

Salary Payable 2

Types of Salary Payment Journal Entries

The major kinds of payroll or salary payment journal entries can be:


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For eg:
Source: Salary Payable (

#1 – Initial Recordation

The main salary journal entry will be recording for the initial payroll. This entry shall record or recognize the gross salary or gross wages that are earned by employees, along with the withholdings from their paycheck, and if any additional taxes would be owed to local authorities or government by the firm. These scenarios have been discussed in the examples above.

#2 – Accrued Wages

There may be accrued salaries or wage entry, which shall be recognized or recorded at the end of every accounting periodAccounting PeriodAccounting Period refers to the period in which all financial transactions are recorded and financial statements are prepared. This might be quarterly, semi-annually, or annually, depending on the period for which you want to create the financial statements to be presented to investors so that they can track and compare the company's overall more, and that might be intended to recognize or record the salaries or wages amount that is owed to employees of the firm but has not been paid yet. This journal entry will then be reversed in the next accounting period so that the initial recognition or the initial recordation entry can take its place. This entry also can be ignored or avoided if the salary or wage amount is not material.

#3 – Manual Payments

An organization or the firm may, on a given occasion, pay to employees’ manual paychecks, either because of employment terminations or any other pay adjustments (e.g., any retrospective amendment in the law, causing an outflow of additional wages to the existing employees for prior periods).

Examples of Salary Payable Journal Entries

The following are examples of salary payable

Salary Payable Example #1

Vanilla Bond Private limited company incorporated in the US has just started the business of brokerage with equity capital of $1.5 million. It has recently hired Regina as an accountant to the firm. She was asked to make journal entries for the following salary payable scenario in the accounting software.

Consider the following details of salary and taxes, which is due to the 1st of April; you are required to pass journal entries for accrualJournal Entries For AccrualAccrued expense Journal Entry is the journal entry passed to record the expenses which are incurred over one accounting period by the company but not yet paid actually in that accounting more in the books of account of Vanilla Bond Private limited.

Example 1


The journal entries for the above example as on accrual in books of account would be as follows:

Example 1.1

Salary Payable Example #2

Continuing with the above example and details, consider now that Vanilla Bond Pvt Ltd pays its employees salary on every 29th of the month via NEFT from Chase Bank account. You, as the accountant of the firm, are required to post the journal entries while making payment of salary in the books of account of the firm.


The salaries payable journal entries for the above example as on the date of payment in books of account would be as follows:

Example 2

As it can be noted that all the payables account has been cleared to 0 since they were paid out. And finally, while posting a retained earnings journal entry, the salary expense that was sitting with debit balance will be credited, and the Retained earnings account will be debited. After that, salary expense a/c will also be cleared out to 0 balance at the end of each month.

Important Points

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This article has been a guide to what is Salary Payable and its definition. Here we discuss top examples and types of salary payment journal entries. You can learn more about accounting from following articles –