Journalizing the Employer Payroll Taxes
Follow the steps below to journalize an employer’s payroll taxes:
The payroll register of John Roadways is the source document for the payroll journal entry.
- Identify: The following accounts are affected:
- Payroll Tax Expenses
- Social Security Tax Payable
- Medicare Tax Payable
- State Unemployment Tax Payable
- Federal Unemployment Tax Payable
- Classify: The accounts can be classified as:
- Payroll Tax Expenses - Expense account
- Social Security Tax Payable - Liability account
- Medicare Tax Payable - Liability account
- State Unemployment Tax Payable - Liability account
- Federal Unemployment Tax Payable - Liability account
- Effect: The effect on the accounts is:
- Payroll Tax increased by $333.68
- Social Security Tax increased by $135.22
- Medicare Tax Payable increased by $63.25
- State Unemployment Tax Payable increased by $117.77
- Federal Unemployment Tax Payable increased by $17.44
- Debit rule: Debit Payroll Tax Expense account
- Credit rule: Credit – liabilities accounts (Social Security Tax Payable, Medicare Tax Payable, State Unemployment Tax Payable, and Federal Unemployment Tax Payable accounts)
- Prepare T Accounts
- Prepare and post a Journal Entry
- Post the payroll journal entry
Ledger Accounts:
Payroll Tax Expenses
Social Security Tax Payable
Medicare Tax Payable
State Unemployment Tax Payable
Federal Unemployment Tax Payable
