As an example of payroll accounting, if gross pay is 2,000, employee tax is 500, and other deductions are 100, then the net pay due do the employee is 1,400. Suppose in the above example the net wages due to the employee were 1,100. Payroll Journal Entry. As you can see, the employer's cost of an employee goes well beyond the amount reported on the pay check. There are four salaried employees in the Selling & Administrative Department with combined salaries of $9,000 per pay period. Below is the entry … Results of Journal Entry. Normally the employee would be paid the amount of 1,100, however in this case the wage advance of 300 made earlier in the month needs to be deducted from the amount due, and the employee will be paid the balance of 800. More Examples of Journal Entries Accounting Equation Double Entry Recording of Accounting Transactions Here is the payroll journal entry to record the payment of the paycheck: Payroll Journal Entry Example 1. Each pay period, pay is calculated based on time cards and salary amounts and then expensed. --> Decrease in Assets Salaries Expense account balance increases by $3,500. NOTE: In the following examples we assume that the employee's tax rate for Social Security is 6.2% and that the employer's tax rate is 6.2%. Definition: A payroll journal entry is a method of accrual accounting, in which a business records its debit and credit payroll transactions pertaining to employee compensation. Credit wages and salaries payable for the same amount as the debit in Step 3, as credits must equal debits. Payroll Journal Entry Examples: ABC Company has one employee, Mary Smith, that is paid weekly. Let's assume our company also has salaried employees who are paid semimonthly on the 15th and the … The payroll accounting journal entries would be as follows: A salaries payable entry will tell you exactly how much money you owe to your employees for services performed. A payroll journal entry includes employee wages, direct labor expenses, FICA expenses, payroll taxes, and holiday, vacation and sick days in the Debit section. Payroll journal entries are used to record employer-related compensation expenses and employee deductions. The pay period for these employees is the half-month that ends on payday. The credit entry to the accrued expenses reflects the liability of the business to pay the supplier (landlord) for the … Basics of Journal Entries Accounting Journal Entry Examples. Keeping accurate payroll records is important because through your payroll, you are paying bills that, if not paid properly, can cause major problems for your company. The accrual journal shown above debits the rent expense account which represents the cost to the business of using the premises for the month. For many companies, the total cost of an employee can be 125% to 150% of the gross earnings. Crediting wages and salaries payable increases the company’s obligation to pay salaries and wages to employees. (For QuickBooks, simply click on “Company” then go to “Make General Journal Entries” and enter your payroll entry.) Notice the Wage Expense is debited for the gross pay. This amount will be recorded as various liabilities. If the company debits wages and salaries expense for $7,500, it must credit wages and salaries payable for $7,500. Of course, these added costs also need to be entered in the accounting records. Wages are debited to increase the expense account, … These journal entries ensure appropriate income statement and balance sheet entries. Examples of Payroll Journal Entries For Salaries. The difference between the gross pay and the net pay is the taxes that were withheld from the employee’s pay. Salaries Payable Journal Entries. The journal entry to record this is as follows: Paid $3,500 salaries. Cash balance decreases by $3,500. 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