Payroll Accounting Entries
Employers normally withhold amounts from employees’ 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.
Assume that a company had a payroll of $35,000 for the month of April. The company withheld the following amounts from the employees’ pay: federal income taxes $4,100; state income taxes $360; FICA taxes $2,678; and medical insurance premiums $940. This entry records the payroll:
Date | Account | Debit | Credit |
April | Salaries Expense | 35,000.00 | |
Federal Income Tax Withheld Payable (given) | 4,100.00 | ||
State Income Tax Withheld Payable (given) | 360.00 | ||
FICA Social Security Taxes Payable ($35,000 x 6.2%) | 2,170.00 | ||
FICA Medicare Tax Payable ($35,000 x 1.45%) | 507.50 | ||
Employee Medical Insurance Payable (given) | 940.00 | ||
Salaries Payable (35,000 - 4100 - 360 - 2170 - 507.50 - 940) | 26,922.50 | ||
To record the payroll for the month ended April 30. |
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:
Date | Account | Debit | Credit |
April | Payroll Tax Expense | 4,848 | |
FICA Social Security Taxes Payable ($35,000 x 6.2%) | 2,170 | ||
FICA Medicare Tax Payable ($35,000 x 1.45%) | 507.5 | ||
FUTA Taxes Payable ($35,000 x 0.8%) | 280 | ||
SUTA Taxes Payable | 1890 | ||
To record employer's payroll taxes. |
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