Schneider Incorporated had salaries payable of $60,900 and $91,000 at the beginning and end of the year, respectively. During the year, Schneider recorded $622,000 in salaries expense in its income statement. Cash outflows for salaries during the year were:单项选择题
A
$622,000.
B
$531,000.
C
$652,100.
D
$591,900.

Question

Schneider Incorporated had salaries payable of $60,900 and $91,000 at the beginning and end of the year, respectively. During the year, Schneider recorded $622,000 in salaries expense in its income statement. Cash outflows for salaries during the year were:单项选择题

A

$622,000.

B

$531,000.

C

$652,100.

D

$591,900.

BlackTom AI · Accepted Answer

Starting with the given data, restate the key figures: beginning salaries payable = 60,900; ending salaries payable = 91,000; salaries expense recorded = 622,000. The question asks for cash outflows for salaries during the year.

First, recall the accrual-basis relationship for salaries payable:
Beginning payable + Salaries expense − Cash paid = Ending payable
Rearranging to solve for Cash paid:
Cash paid = Beginning payable + Salaries expense − Ending payable
Plugging in the numbers:
Cash paid = 60,900 + 622,000 − 91,000 = 591,900

Now evaluate each option one by one:

Option 1: $622,000
Why this is not correct: This would imply that all of the salaries expense was paid in cash, with no change in the salaries payable account. However, salaries payable increased from 60,900 to 91,000 over the year, indicating that less cash was paid than the total expense (some amount remained as payable). Therefore $622,000 overstates the cash paid.

Option 2: $531,000
Why this is not correct: If the cash paid were $531,000, the ending payable would be calculated as Beginning payable + Expense − Cash paid = 60,900 + 622,000 − 531,000 = 151,900. This does not match the reported ending payable of 91,000, so this option is inconsistent with the given data.

Option 3: $652,100
Why this is not correct: Using the formula, cash paid would have to satisfy 60,900 + 622,000 − Cash paid = Ending payable. Solving would give Cash paid = 60,900 + 622,000 − 91,000 = 591,900, not 652,100. Thus this option misaligns with the reported payable balances.

Option 4: $591,900
Why this is correct: This value satisfies the accrual relationship exactly: 60,900 + 622,000 − 591,900 = 91,000, which matches the ending salaries payable. It reflects paying out cash for salaries while a portion remains as accounts payable at year end, consistent with accrual accounting.

In summary, the cash outflows are determined by adjusting the salaries expense for the change in salaries payable, and only Option 4 yields a balance that aligns with both the beginning and ending payable figures and the recorded expense.