More Examples of Journal Entries Accounting Equation Double Entry Recording of Accounting Transactions Payroll Journal Entry Examples: ABC Company has one employee, Mary Smith, that is paid weekly. Below is the entry ⦠As you can see, the employer's cost of an employee goes well beyond the amount reported on the pay check. Let's assume our company also has salaried employees who are paid semimonthly on the 15th and the ⦠Paid $3,500 salaries. 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. Crediting wages and salaries payable increases the companyâs obligation to pay salaries and wages to employees. Each pay period, pay is calculated based on time cards and salary amounts and then expensed. The accrual journal shown above debits the rent expense account which represents the cost to the business of using the premises for the month. 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. Cash balance decreases by $3,500. A payroll journal entry includes employee wages, direct labor expenses, FICA expenses, payroll taxes, and holiday, vacation and sick days in the Debit section. There are four salaried employees in the Selling & Administrative Department with combined salaries of $9,000 per pay period. For many companies, the total cost of an employee can be 125% to 150% of the gross earnings. The difference between the gross pay and the net pay is the taxes that were withheld from the employeeâs pay. These journal entries ensure appropriate income statement and balance sheet entries. Examples of Payroll Journal Entries For Salaries. Results of Journal Entry. Here is the payroll journal entry to record the payment of the paycheck: Payroll Journal Entry Example 1. Credit wages and salaries payable for the same amount as the debit in Step 3, as credits must equal debits. If the company debits wages and salaries expense for $7,500, it must credit wages and salaries payable for $7,500. The credit entry to the accrued expenses reflects the liability of the business to pay the supplier (landlord) for the ⦠Payroll Journal Entry. Payroll journal entries are used to record employer-related compensation expenses and employee deductions. 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. Suppose in the above example the net wages due to the employee were 1,100. The payroll accounting journal entries would be as follows: Basics of Journal Entries Accounting Journal Entry Examples. The journal entry to record this is as follows: The pay period for these employees is the half-month that ends on payday. 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. (For QuickBooks, simply click on âCompanyâ then go to âMake General Journal Entriesâ and enter your payroll entry.) Salaries Payable Journal Entries. Wages are debited to increase the expense account, ⦠There is one salaried employee in the warehouse department with a gross salary of $48,000 per year, or $2,000 per pay period. Notice the Wage Expense is debited for the gross pay. --> Decrease in Assets Salaries Expense account balance increases by $3,500. A salaries payable entry will tell you exactly how much money you owe to your employees for services performed. 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%. 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