Which journal entry is posted as a debit (DR)?

Which journal entry is posted as a debit (DR)?

• A. $5,000.00 paycheck, posted to the checking account
• B. $10,000.00 withheld taxes, posted to liability account
• C. $15,000.00 deposit of withheld taxes, posted to liability account
• D. $55,000.00 payroll tax liability, posted to liability account

Answer: (C)

In this scenario, the correct answer is associated with the nature of journal entries, specifically focusing on the principles of debits and credits within accounting. When considering a deposit related to withheld taxes, it's important to differentiate whether that transaction increases or decreases an account. A deposit of withheld taxes indicates that the taxes which have been collected are now being moved to a different account, often a government agency or another tax-related account. In accounting terms, when an amount is deposited (as in the case of sending withheld taxes), it reduces the liability that was incurred when the taxes were originally withheld from employees’ paychecks. A liability account is credited when the obligation is created, and debiting this account when the payment is made effectively decreases that liability. Therefore, posting the deposit to the liability account as a debit correctly reflects this reduction. In summary, the journal entry that involves a deposit of withheld taxes, which is to be posted as a debit, indicates that the company is fulfilling its obligation by paying off its previous liability. This is why it is considered the right answer in understanding the debit effect on the liability account.

In this scenario, the correct answer is associated with the nature of journal entries, specifically focusing on the principles of debits and credits within accounting. When considering a deposit related to withheld taxes, it's important to differentiate whether that transaction increases or decreases an account.

A deposit of withheld taxes indicates that the taxes which have been collected are now being moved to a different account, often a government agency or another tax-related account. In accounting terms, when an amount is deposited (as in the case of sending withheld taxes), it reduces the liability that was incurred when the taxes were originally withheld from employees’ paychecks. A liability account is credited when the obligation is created, and debiting this account when the payment is made effectively decreases that liability. Therefore, posting the deposit to the liability account as a debit correctly reflects this reduction.

In summary, the journal entry that involves a deposit of withheld taxes, which is to be posted as a debit, indicates that the company is fulfilling its obligation by paying off its previous liability. This is why it is considered the right answer in understanding the debit effect on the liability account.