Payroll and Payroll Taxes Payable

Payroll and Payroll Taxes Payable - Payroll and Payroll...

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Payroll and Payroll Taxes Payable Assume that Susan Alena works 40 hours this week for Pepitone Inc., earning a wage of $10 per hour. Will Susan receive a $400 check at the end of the week? Not likely. The reason: Pepitone is required to withhold amounts from her wages to pay various governmental authorities. For example, Pepitone will withhold amounts for Social Security taxes 1 and for federal and state income taxes. If these withholdings total $100, Susan will receive a check for only $300. Illustration 10-2 summarizes the types of payroll deductions that normally occur for most companies. As a result of these deductions, companies withhold from employee paychecks amounts that must be paid to other parties. Pepitone therefore has incurred a liability to pay these third parties, and must report this liability in its balance sheet. As a second illustration, assume that Cargo Corporation records its payroll for the week of March 7 with the journal entry shown below. Salaries and Wages Expense
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This note was uploaded on 11/08/2011 for the course ACCOUNTING ac 201 taught by Professor - during the Spring '11 term at Montgomery.

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Payroll and Payroll Taxes Payable - Payroll and Payroll...

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