Payroll Liabilities and Tax Records, Page 18

State Unemployment Taxes

State unemployment taxes are paid on a quarterly basis. Consider the following example:

John Roadways pays $217.77 in State Unemployment taxes.

Analysis:

1. Identify: The following accounts are affected: 

• State Unemployment Tax Payable 
• Cash in Bank 

2. Classify: The accounts can be classified as: 

• State Unemployment Tax Payable – Liability Account 
• Cash in Bank – Asset Account 

3. Effect: 

• State Unemployment Tax Payable decreased by $217.77 
• Cash in Bank decreased by $217.77 

4. Debit rule: Debit State Unemployment Tax Payable 
5. Credit rule: Credit Cash in Bank 
6. Prepare T Accounts

7. Post a journal entry