![]() #3 – Payroll Journal Entry Payroll Taxes Payable The total amount of these expenses include their share of Mary’s FICA, ABC Company’s estimated cost for unemployment tax, worker compensation insurance, and ABC Company’s portion of Mary’s health insurance. In addition to the gross pay and withholding in the previous payroll journal entries, ABC Company has incurred additional payroll liability expenses that must be recorded. ( In accounting software such as QuickBooks…you will credit the bank account you are paying your employee from.) #2 – Payroll Journal Entry For Salary Payable ![]() When ABC Company issues Mary her payroll check for the most recent accounting period, they would post the following entry to decrease ( debit) the Wage payable account balance and payroll tax balance and decrease ( credit) cash. #1 – Payroll Journal Entry Wage, Payroll, And Insurance ![]() The payroll process examples below are a weekly payroll journal entry, which includes her gross wages, payroll withholding, and ABC Company’s cost. Payroll transactions are posted to the general ledger and can be used in a manual accounting system and also in accounting software such as QuickBooks. (For QuickBooks, simply click on “ Company” then go to “ Make General Journal Entries” and enter your payroll entry.)ĪBC Company has one employee, Mary Smith, that is paid weekly. In this section of small business accounting payroll, we will use a fictitious company to provide examples of journal entries to record gross wages, payroll withholding, and related payroll costs of a payroll transaction. What Is Not An Employer Payroll Tax Expense?Įven though the employer is required to withhold contributions made by the employee – federal income tax, state taxes (though some states do not have a state income tax), Social Security and Medicare are not going to be recognized as payroll tax expenses by the business since they are paid by employee through deductions from the employees’ paychecks. The payroll tax that is actually an expense to an employer includes the actual employer contributions to Social Security and Medicare plus any state and federal unemployment taxes. Since the business withholds a portion of the employee’s wages, it does not pay for all of them, and as such, a portion of the payroll tax is an expense to a business. What Is Included In An Employer Payroll Tax Expense?
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