{"id":803,"date":"2015-05-13T17:25:46","date_gmt":"2015-05-13T17:25:46","guid":{"rendered":"https:\/\/courses.candelalearning.com\/finacct2x10xmaster\/?post_type=chapter&p=803"},"modified":"2015-05-29T15:09:09","modified_gmt":"2015-05-29T15:09:09","slug":"entries-to-accrue-salaries-and-taxes-for-employees","status":"publish","type":"chapter","link":"https:\/\/courses.lumenlearning.com\/clinton-finaccounting\/chapter\/entries-to-accrue-salaries-and-taxes-for-employees\/","title":{"raw":"Payroll Accounting Entries","rendered":"Payroll Accounting Entries"},"content":{"raw":"Payroll liabilities<\/strong> In most business organizations, accounting for payroll is particularly important because (1) payrolls often are the largest expense that a company incurs, (2) both federal and state governments require maintaining detailed payroll records, and (3) companies must file regular payroll reports with state and federal governments and remit amounts withheld or otherwise due. Payroll liabilities include taxes and other amounts withheld from employees\u2019 paychecks and taxes paid by employers.\r\n\r\nhttps:\/\/youtu.be\/Q0o_M5BcQKw\r\n\r\nEmployers normally withhold amounts from employees\u2019 paychecks for federal income taxes; state income taxes; FICA (social security) taxes; and other items such as union dues, medical insurance premiums, life insurance premiums, pension plans, and pledges to charities.\r\n\r\nAssume that a company had a payroll of\u00a0$35,000 for the month of April. The company withheld the following amounts from the employees\u2019 pay: federal income taxes\u00a0$4,100; state income taxes $360; FICA taxes $2,678; and medical insurance premiums $940. This entry records the payroll:\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n
Date<\/strong><\/td>\r\nAccount<\/strong><\/td>\r\nDebit<\/strong><\/td>\r\nCredit<\/strong><\/td>\r\n<\/tr>\r\n
April<\/td>\r\nSalaries Expense<\/td>\r\n\u00a0\u00a0 35,000.00<\/td>\r\n<\/td>\r\n<\/tr>\r\n
<\/td>\r\n\u00a0\u00a0\u00a0\u00a0\u00a0 Federal Income Tax Withheld Payable (given)<\/td>\r\n<\/td>\r\n\u00a0\u00a0\u00a0\u00a0 4,100.00<\/td>\r\n<\/tr>\r\n
<\/td>\r\n\u00a0\u00a0\u00a0\u00a0\u00a0 State Income Tax Withheld Payable (given)<\/td>\r\n<\/td>\r\n\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 360.00<\/td>\r\n<\/tr>\r\n
<\/td>\r\n\u00a0\u00a0\u00a0\u00a0 FICA Social Security Taxes Payable ($35,000 x 6.2%)<\/td>\r\n<\/td>\r\n\u00a0\u00a0\u00a0\u00a0 2,170.00<\/td>\r\n<\/tr>\r\n
<\/td>\r\n\u00a0\u00a0\u00a0\u00a0 FICA Medicare Tax Payable ($35,000 x 1.45%)<\/td>\r\n<\/td>\r\n\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 507.50<\/td>\r\n<\/tr>\r\n
<\/td>\r\n\u00a0\u00a0\u00a0\u00a0 Employee Medical Insurance Payable (given)<\/td>\r\n<\/td>\r\n\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 940.00<\/td>\r\n<\/tr>\r\n
<\/td>\r\n\u00a0\u00a0\u00a0\u00a0 Salaries Payable (35,000 - 4100 - 360 - 2170 - 507.50 - 940)<\/td>\r\n<\/td>\r\n\u00a0\u00a0 26,922.50<\/td>\r\n<\/tr>\r\n
<\/td>\r\nTo record the payroll for the month ended April 30.<\/td>\r\n<\/td>\r\n<\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\nAll accounts credited in the entry are current liabilities and will be reported on the balance sheet if not paid prior to the preparation of financial statements. When these liabilities are paid, the employer debits each one and credits Cash.\r\n\r\nEmployers normally record payroll taxes at the same time as the payroll to which they relate. Assume the payroll taxes an employer pays for April are FICA taxes,\u00a0 state unemployment taxes (SUTA)\u00a0$1,890; and federal unemployment taxes (FUTA).\u00a0 No employee has earned more than $7,000 in this calendar year.\u00a0 The entry to record these payroll taxes would be:\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n
Date<\/strong><\/td>\r\nAccount<\/strong><\/td>\r\nDebit<\/strong><\/td>\r\nCredit<\/strong><\/td>\r\n<\/tr>\r\n
April<\/td>\r\nPayroll Tax Expense<\/td>\r\n4,848<\/td>\r\n<\/td>\r\n<\/tr>\r\n
<\/td>\r\nFICA Social Security Taxes Payable ($35,000 x 6.2%)<\/td>\r\n<\/td>\r\n2,170<\/td>\r\n<\/tr>\r\n
<\/td>\r\nFICA Medicare Tax Payable ($35,000 x 1.45%)<\/td>\r\n<\/td>\r\n507.5<\/td>\r\n<\/tr>\r\n
<\/td>\r\nFUTA Taxes Payable ($35,000 x 0.8%)<\/td>\r\n<\/td>\r\n280<\/td>\r\n<\/tr>\r\n
<\/td>\r\nSUTA Taxes Payable<\/td>\r\n<\/td>\r\n1890<\/td>\r\n<\/tr>\r\n
<\/td>\r\nTo record employer's payroll taxes.<\/td>\r\n<\/td>\r\n<\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\nThese amounts are in addition to the amounts withheld from employees\u2019 paychecks. The credit to FICA Taxes Payable is equal to the amount withheld from the employees\u2019 paychecks. The company can credit both its own and the employees\u2019 FICA taxes to the same liability account, since both are payable at the same time to the same agency. When these liabilities are paid, the employer debits each of the liability accounts and credits Cash.\r\n<\/div>\r\n
\u00a0\r\nhttp:\/\/www.openassessments.com\/assessments\/1204\r\n<\/div>","rendered":"

Payroll liabilities<\/strong> In most business organizations, accounting for payroll is particularly important because (1) payrolls often are the largest expense that a company incurs, (2) both federal and state governments require maintaining detailed payroll records, and (3) companies must file regular payroll reports with state and federal governments and remit amounts withheld or otherwise due. Payroll liabilities include taxes and other amounts withheld from employees\u2019 paychecks and taxes paid by employers.<\/p>\n