Payroll Liabilities and Tax Records, Page 19

Other Payroll Liabilities

Employers also make payments toward employees’ voluntary deductions. 

Consider the following example:

John Roadways pays $63.65 towards hospital insurance premiums payable.

Analysis: 

1. Identify: The following accounts are affected: 
   
   
   • Hospital Insurance Premiums Payable 
   • Cash in Bank 
2. Classify: The accounts can be classified as: 

• Hospital Insurance Premiums Payable - Liability Account 
• Cash in bank - Asset Account 

3. Effect: 

• Hospital Insurance Premiums Payable decreased by $63.65 
• Cash in Bank decreased by $63.65 

4. Debit rule: Debit Hospital Insurance Premiums Payable 
5. Credit rule: Credit Cash in Bank 
6. Prepare T Accounts

7. Post a journal entry