Payroll Liabilities and Tax Records Accounting 1 Ms. Alltucker Chapter 13 Payroll Liabilities and Tax Records Accounting 1 Ms. Alltucker

Learning Objectives Record payroll transactions in the general journal Describe the employer’s payroll taxes Compute and complete payroll tax expense forms Record the payment of tax liabilities in the general journal Complete payroll tax reports Define the accounting terms introduced in this chapter.

Journalizing and Posting the Payroll What you will learn: How to compute the business payroll deductions How to record the payroll entry in the general journal Why it’s important: Payroll deductions are liabilities of the business. It is essential that payroll deductions are journalized and posted in a timely manner.

Journalizing & Posting the Payroll After payroll is prepared—a check is written to transfer the total net pay from REGULAR checking account to the PAYROLL CHECKING account All payroll checks are written from PAYROLL CHECKING account only

Analyzing the Payroll Transaction Employee earnings are a normal operating expense of a business Salary expense—expense account used to record employees’ earnings Debit is the increase side Income and FICA taxes are withheld from gross earnings and retained until it is time to pay the government agencies Each type of payroll liability is recorded in a separate account

Payroll Liabilities Employees’ Federal Income Tax Payable Medicare Tax Payable Hospital Insurance Premiums Payable US Savings Bonds Payable Credit Union Payable Union Dues Payable United Way Payable ** the difference between gross pay and net pay employer’s payroll liabilities

Business Transaction Roadrunner’s payroll register is the source document for the payroll journal entry.

Business Transaction JOURNAL ENTRY Using the totals from the payroll register Debit Salary Expense and credit All of the deductions from the payroll register totals

Posting the Payroll Entry to the General Ledger Review on page 319 on how to post to the general ledger DO NOT FORGET Post reference numbers on the journal and the ledger pages