{"id":3815,"date":"2020-10-22T20:44:34","date_gmt":"2020-10-22T20:44:34","guid":{"rendered":"https:\/\/courses.lumenlearning.com\/wm-financialaccounting\/?post_type=chapter&#038;p=3815"},"modified":"2020-11-24T22:14:22","modified_gmt":"2020-11-24T22:14:22","slug":"payroll-journal-entries","status":"publish","type":"chapter","link":"https:\/\/courses.lumenlearning.com\/suny-clinton-financialaccounting\/chapter\/payroll-journal-entries\/","title":{"raw":"Payroll Journal Entries","rendered":"Payroll Journal Entries"},"content":{"raw":"<div class=\"textbox learning-objectives\">\r\n<h3>Learning Outcomes<\/h3>\r\n<ul>\r\n \t<li style=\"font-weight: 400;\">Prepare entries to accrue payroll and payroll-related taxes<\/li>\r\n<\/ul>\r\n<\/div>\r\nAssume a company had a payroll of $35,000 for the month of April. The company withheld the following amounts from the employees\u2019 pay: federal income taxes $4,100; state income taxes $360; FICA taxes $2,678; and medical insurance premiums $940. This entry records the payroll:\r\n<table class=\"fin-table gridded\"><caption class=\"u-clearfix\"><span style=\"text-transform: uppercase;\">Journal<\/span><\/caption>\r\n<thead>\r\n<tr aria-hidden=\"true\">\r\n<td colspan=\"5\"><\/td>\r\n<\/tr>\r\n<tr>\r\n<th scope=\"col\">Date<\/th>\r\n<th scope=\"col\">Description<\/th>\r\n<th scope=\"col\">Post. Ref.<\/th>\r\n<th scope=\"col\">Debit<\/th>\r\n<th scope=\"col\">Credit<\/th>\r\n<\/tr>\r\n<\/thead>\r\n<tbody>\r\n<tr>\r\n<th scope=\"row\">April<\/th>\r\n<td>Salaries Expense<\/td>\r\n<td class=\"r\"><\/td>\r\n<td class=\"r\">35,000.00<\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<th><span class=\"u-sr-only\">April<\/span><\/th>\r\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Federal Income Tax Withheld Payable (given)<\/td>\r\n<td><\/td>\r\n<td class=\"r\"><\/td>\r\n<td class=\"r\">4,100.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<th><span class=\"u-sr-only\">April<\/span><\/th>\r\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0State Income Tax Withheld Payable (given)<\/td>\r\n<td><\/td>\r\n<td class=\"r\"><\/td>\r\n<td class=\"r\">360.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<th><span class=\"u-sr-only\">April<\/span><\/th>\r\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0FICA Social Security Taxes Payable ($35,000 x 6.2%)<\/td>\r\n<td><\/td>\r\n<td class=\"r\"><\/td>\r\n<td class=\"r\">2,170.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<th><span class=\"u-sr-only\">April<\/span><\/th>\r\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0FICA Medicare Tax Payable ($35,000 x 1.45%)<\/td>\r\n<td><\/td>\r\n<td class=\"r\"><\/td>\r\n<td class=\"r\">507.50<\/td>\r\n<\/tr>\r\n<tr>\r\n<th><span class=\"u-sr-only\">April<\/span><\/th>\r\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Employee Medical Insurance Payable (given)<\/td>\r\n<td><\/td>\r\n<td class=\"r\"><\/td>\r\n<td class=\"r\">940.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<th><span class=\"u-sr-only\">April<\/span><\/th>\r\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Salaries Payable (35,000 \u2013 4100 \u2013 360 \u2013 2170 \u2013 507.50 \u2013 940)<\/td>\r\n<td><\/td>\r\n<td class=\"r\"><\/td>\r\n<td class=\"r\">26,922.50<\/td>\r\n<\/tr>\r\n<tr>\r\n<th><span class=\"u-sr-only\">April<\/span><\/th>\r\n<td>To record the payroll for the month ended April 30.<\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/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, state unemployment taxes (SUTA) $1,890; and federal unemployment taxes (FUTA). No employee has earned more than $7,000 in this calendar year. The entry to record these payroll taxes would be:\r\n<table class=\"fin-table gridded\"><caption class=\"u-clearfix\"><span style=\"text-transform: uppercase;\">Journal<\/span><\/caption>\r\n<thead>\r\n<tr aria-hidden=\"true\">\r\n<td colspan=\"5\"><\/td>\r\n<\/tr>\r\n<tr>\r\n<th scope=\"col\">Date<\/th>\r\n<th scope=\"col\">Description<\/th>\r\n<th scope=\"col\">Post. Ref.<\/th>\r\n<th scope=\"col\">Debit<\/th>\r\n<th scope=\"col\">Credit<\/th>\r\n<\/tr>\r\n<\/thead>\r\n<tbody>\r\n<tr>\r\n<th scope=\"row\">April<\/th>\r\n<td>Payroll Tax Expense<\/td>\r\n<td class=\"r\"><\/td>\r\n<td class=\"r\">4,848<\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<th><span class=\"u-sr-only\">April<\/span><\/th>\r\n<td>FICA Social Security Taxes Payable ($35,000 x 6.2%)<\/td>\r\n<td><\/td>\r\n<td class=\"r\"><\/td>\r\n<td class=\"r\">2,170<\/td>\r\n<\/tr>\r\n<tr>\r\n<th><span class=\"u-sr-only\">April<\/span><\/th>\r\n<td>FICA Medicare Tax Payable ($35,000 x 1.45%)<\/td>\r\n<td><\/td>\r\n<td class=\"r\"><\/td>\r\n<td class=\"r\">507.5<\/td>\r\n<\/tr>\r\n<tr>\r\n<th><span class=\"u-sr-only\">April<\/span><\/th>\r\n<td>FUTA Taxes Payable ($35,000 x 0.8%)<\/td>\r\n<td><\/td>\r\n<td class=\"r\"><\/td>\r\n<td class=\"r\">280<\/td>\r\n<\/tr>\r\n<tr>\r\n<th><span class=\"u-sr-only\">April<\/span><\/th>\r\n<td>SUTA Taxes Payable<\/td>\r\n<td><\/td>\r\n<td class=\"r\"><\/td>\r\n<td class=\"r\">1890<\/td>\r\n<\/tr>\r\n<tr>\r\n<th><span class=\"u-sr-only\">April<\/span><\/th>\r\n<td>To record employer\u2019s payroll taxes.<\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/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\r\nWatch this video to review how to record payroll and taxes.<i><\/i>\r\n\r\nhttps:\/\/youtu.be\/Q0o_M5BcQKw\r\n<div class=\"textbox tryit\">\r\n<h3>PRACTICE QUESTION<\/h3>\r\nhttps:\/\/assessments.lumenlearning.com\/assessments\/23805\r\n\r\n[ohm_question hide_question_numbers=1]206386[\/ohm_question]\r\n\r\n<\/div>","rendered":"<div class=\"textbox learning-objectives\">\n<h3>Learning Outcomes<\/h3>\n<ul>\n<li style=\"font-weight: 400;\">Prepare entries to accrue payroll and payroll-related taxes<\/li>\n<\/ul>\n<\/div>\n<p>Assume a company had a payroll of $35,000 for the month of April. The company withheld the following amounts from the employees\u2019 pay: federal income taxes $4,100; state income taxes $360; FICA taxes $2,678; and medical insurance premiums $940. This entry records the payroll:<\/p>\n<table class=\"fin-table gridded\">\n<caption class=\"u-clearfix\"><span style=\"text-transform: uppercase;\">Journal<\/span><\/caption>\n<thead>\n<tr aria-hidden=\"true\">\n<td colspan=\"5\"><\/td>\n<\/tr>\n<tr>\n<th scope=\"col\">Date<\/th>\n<th scope=\"col\">Description<\/th>\n<th scope=\"col\">Post. Ref.<\/th>\n<th scope=\"col\">Debit<\/th>\n<th scope=\"col\">Credit<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<th scope=\"row\">April<\/th>\n<td>Salaries Expense<\/td>\n<td class=\"r\"><\/td>\n<td class=\"r\">35,000.00<\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<th><span class=\"u-sr-only\">April<\/span><\/th>\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Federal Income Tax Withheld Payable (given)<\/td>\n<td><\/td>\n<td class=\"r\"><\/td>\n<td class=\"r\">4,100.00<\/td>\n<\/tr>\n<tr>\n<th><span class=\"u-sr-only\">April<\/span><\/th>\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0State Income Tax Withheld Payable (given)<\/td>\n<td><\/td>\n<td class=\"r\"><\/td>\n<td class=\"r\">360.00<\/td>\n<\/tr>\n<tr>\n<th><span class=\"u-sr-only\">April<\/span><\/th>\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0FICA Social Security Taxes Payable ($35,000 x 6.2%)<\/td>\n<td><\/td>\n<td class=\"r\"><\/td>\n<td class=\"r\">2,170.00<\/td>\n<\/tr>\n<tr>\n<th><span class=\"u-sr-only\">April<\/span><\/th>\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0FICA Medicare Tax Payable ($35,000 x 1.45%)<\/td>\n<td><\/td>\n<td class=\"r\"><\/td>\n<td class=\"r\">507.50<\/td>\n<\/tr>\n<tr>\n<th><span class=\"u-sr-only\">April<\/span><\/th>\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Employee Medical Insurance Payable (given)<\/td>\n<td><\/td>\n<td class=\"r\"><\/td>\n<td class=\"r\">940.00<\/td>\n<\/tr>\n<tr>\n<th><span class=\"u-sr-only\">April<\/span><\/th>\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Salaries Payable (35,000 \u2013 4100 \u2013 360 \u2013 2170 \u2013 507.50 \u2013 940)<\/td>\n<td><\/td>\n<td class=\"r\"><\/td>\n<td class=\"r\">26,922.50<\/td>\n<\/tr>\n<tr>\n<th><span class=\"u-sr-only\">April<\/span><\/th>\n<td>To record the payroll for the month ended April 30.<\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>All 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.<\/p>\n<p>Employers 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, state unemployment taxes (SUTA) $1,890; and federal unemployment taxes (FUTA). No employee has earned more than $7,000 in this calendar year. The entry to record these payroll taxes would be:<\/p>\n<table class=\"fin-table gridded\">\n<caption class=\"u-clearfix\"><span style=\"text-transform: uppercase;\">Journal<\/span><\/caption>\n<thead>\n<tr aria-hidden=\"true\">\n<td colspan=\"5\"><\/td>\n<\/tr>\n<tr>\n<th scope=\"col\">Date<\/th>\n<th scope=\"col\">Description<\/th>\n<th scope=\"col\">Post. Ref.<\/th>\n<th scope=\"col\">Debit<\/th>\n<th scope=\"col\">Credit<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<th scope=\"row\">April<\/th>\n<td>Payroll Tax Expense<\/td>\n<td class=\"r\"><\/td>\n<td class=\"r\">4,848<\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<th><span class=\"u-sr-only\">April<\/span><\/th>\n<td>FICA Social Security Taxes Payable ($35,000 x 6.2%)<\/td>\n<td><\/td>\n<td class=\"r\"><\/td>\n<td class=\"r\">2,170<\/td>\n<\/tr>\n<tr>\n<th><span class=\"u-sr-only\">April<\/span><\/th>\n<td>FICA Medicare Tax Payable ($35,000 x 1.45%)<\/td>\n<td><\/td>\n<td class=\"r\"><\/td>\n<td class=\"r\">507.5<\/td>\n<\/tr>\n<tr>\n<th><span class=\"u-sr-only\">April<\/span><\/th>\n<td>FUTA Taxes Payable ($35,000 x 0.8%)<\/td>\n<td><\/td>\n<td class=\"r\"><\/td>\n<td class=\"r\">280<\/td>\n<\/tr>\n<tr>\n<th><span class=\"u-sr-only\">April<\/span><\/th>\n<td>SUTA Taxes Payable<\/td>\n<td><\/td>\n<td class=\"r\"><\/td>\n<td class=\"r\">1890<\/td>\n<\/tr>\n<tr>\n<th><span class=\"u-sr-only\">April<\/span><\/th>\n<td>To record employer\u2019s payroll taxes.<\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>These 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.<\/p>\n<p>Watch this video to review how to record payroll and taxes.<i><\/i><\/p>\n<p><iframe loading=\"lazy\" id=\"oembed-1\" title=\"FA 8 5 Payroll and Payday\" width=\"500\" height=\"375\" src=\"https:\/\/www.youtube.com\/embed\/Q0o_M5BcQKw?feature=oembed&#38;rel=0\" frameborder=\"0\" allowfullscreen=\"allowfullscreen\"><\/iframe><\/p>\n<div class=\"textbox tryit\">\n<h3>PRACTICE QUESTION<\/h3>\n<p>\t<iframe id=\"lumen_assessment_23805\" class=\"resizable\" src=\"https:\/\/assessments.lumenlearning.com\/assessments\/load?assessment_id=23805&#38;embed=1&#38;external_user_id=&#38;external_context_id=&#38;iframe_resize_id=lumen_assessment_23805\" frameborder=\"0\" style=\"border:none;width:100%;height:100%;min-height:400px;\"><br \/>\n\t<\/iframe><\/p>\n<p><iframe loading=\"lazy\" id=\"ohm206386\" class=\"resizable\" src=\"https:\/\/ohm.lumenlearning.com\/multiembedq.php?id=206386&theme=oea&iframe_resize_id=ohm206386\" width=\"100%\" height=\"150\"><\/iframe><\/p>\n<\/div>\n\n\t\t\t <section class=\"citations-section\" role=\"contentinfo\">\n\t\t\t <h3>Candela Citations<\/h3>\n\t\t\t\t\t <div>\n\t\t\t\t\t\t <div id=\"citation-list-3815\">\n\t\t\t\t\t\t\t <div class=\"licensing\"><div class=\"license-attribution-dropdown-subheading\">CC licensed content, Original<\/div><ul class=\"citation-list\"><li>Payroll Journal Entries. <strong>Authored by<\/strong>: Joseph Cooke. <strong>Provided by<\/strong>: Lumen Learning. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by\/4.0\/\">CC BY: Attribution<\/a><\/em><\/li><\/ul><div class=\"license-attribution-dropdown-subheading\">CC licensed content, Shared previously<\/div><ul class=\"citation-list\"><li>Accounting Principles: A Business Perspective. <strong>Authored by<\/strong>: James Don Edwards, University of Georgia &amp; Roger H. Hermanson, Georgia State University. <strong>Provided by<\/strong>: Endeavour International Corporation. <strong>Project<\/strong>: The Global Text Project. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by\/4.0\/\">CC BY: Attribution<\/a><\/em><\/li><\/ul><div class=\"license-attribution-dropdown-subheading\">All rights reserved content<\/div><ul class=\"citation-list\"><li>FA 8 5 Payroll and Payday. <strong>Authored by<\/strong>: Susan Crosson. <strong>Located at<\/strong>: <a target=\"_blank\" href=\"https:\/\/youtu.be\/Q0o_M5BcQKw\">https:\/\/youtu.be\/Q0o_M5BcQKw<\/a>. <strong>License<\/strong>: <em>All Rights Reserved<\/em>. <strong>License Terms<\/strong>: Standard YouTube License<\/li><\/ul><\/div>\n\t\t\t\t\t\t <\/div>\n\t\t\t\t\t <\/div>\n\t\t\t <\/section>","protected":false},"author":90270,"menu_order":10,"template":"","meta":{"_candela_citation":"[{\"type\":\"original\",\"description\":\"Payroll Journal Entries\",\"author\":\"Joseph Cooke\",\"organization\":\"Lumen Learning\",\"url\":\"\",\"project\":\"\",\"license\":\"cc-by\",\"license_terms\":\"\"},{\"type\":\"cc\",\"description\":\"Accounting Principles: A Business Perspective\",\"author\":\"James Don Edwards, University of Georgia & Roger H. Hermanson, Georgia State University\",\"organization\":\"Endeavour International Corporation\",\"url\":\"\",\"project\":\"The Global Text Project\",\"license\":\"cc-by\",\"license_terms\":\"\"},{\"type\":\"copyrighted_video\",\"description\":\"FA 8 5 Payroll and Payday\",\"author\":\"Susan Crosson\",\"organization\":\"\",\"url\":\"https:\/\/youtu.be\/Q0o_M5BcQKw\",\"project\":\"\",\"license\":\"arr\",\"license_terms\":\"Standard YouTube License\"}]","CANDELA_OUTCOMES_GUID":"","pb_show_title":"on","pb_short_title":"","pb_subtitle":"","pb_authors":[],"pb_section_license":""},"chapter-type":[],"contributor":[],"license":[],"class_list":["post-3815","chapter","type-chapter","status-publish","hentry"],"part":837,"_links":{"self":[{"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-financialaccounting\/wp-json\/pressbooks\/v2\/chapters\/3815","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-financialaccounting\/wp-json\/pressbooks\/v2\/chapters"}],"about":[{"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-financialaccounting\/wp-json\/wp\/v2\/types\/chapter"}],"author":[{"embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-financialaccounting\/wp-json\/wp\/v2\/users\/90270"}],"version-history":[{"count":7,"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-financialaccounting\/wp-json\/pressbooks\/v2\/chapters\/3815\/revisions"}],"predecessor-version":[{"id":6589,"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-financialaccounting\/wp-json\/pressbooks\/v2\/chapters\/3815\/revisions\/6589"}],"part":[{"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-financialaccounting\/wp-json\/pressbooks\/v2\/parts\/837"}],"metadata":[{"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-financialaccounting\/wp-json\/pressbooks\/v2\/chapters\/3815\/metadata\/"}],"wp:attachment":[{"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-financialaccounting\/wp-json\/wp\/v2\/media?parent=3815"}],"wp:term":[{"taxonomy":"chapter-type","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-financialaccounting\/wp-json\/pressbooks\/v2\/chapter-type?post=3815"},{"taxonomy":"contributor","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-financialaccounting\/wp-json\/wp\/v2\/contributor?post=3815"},{"taxonomy":"license","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-financialaccounting\/wp-json\/wp\/v2\/license?post=3815"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}