[Nicole90]

I am having trouble understanding the different kinds of taxes for payroll. I am also wanting to know how I can journalize the payroll entries into the general journal. :) I am confused about the whole payroll cycle.

[Wildsporty]

There are several different types of Payroll Taxes.

Fica (Social Security Tax)
Medicare Tax
Federal Income Tax
State Income Tax

You may have Local Income tax

SUTA (State Unemployment Tax)
FUTA (Federal Unemployment Tax)

The entry would be a debit on the gross wage side as it is included in gross wages than the credit is to the taxes payable for that particular tax.

The adjusting entry is a credit to the bank and a debit to the taxes payable account.

Thus when payroll is entered it would look something like this:

80100000 (Gross Wages) Debit 2500.00

21030000 (Fica/Medicare) Credit 191.25

21000000 (Federal Tax) Credit 375.00

21015010 (State Tax ) Credit 205.00

21045000 (Futa Tax) Credit 20.00

21030000 (Fica/medicare) Credit 191.25

21060010 (Suta Tax) Credit 62.50

80200000(Unemployment Tax) Debit 82.50

80100000 (Fica/Medicare Tax) Debit 191.25

21180000 Accrued wages and Taxes Credit 1728.25

Credits = 2773.25
Debits = 2773.25

The 2500 is the gross salary... the 1728.25 is the net salary.

2500
-191.25
-375.00
-205.00
---------
1728.75

The employer's share of the Fica/Medicare is a credit to the payables account but is offset by the employer's liability account. It must go into the payable account to be paid.

Now when it is paid from the payable accounts the tax accounts will be

10200000 (Cash) Credit 962.50
Debit 21000000 (federal tax ) 375.00
Debit 21030000 (fica/medicare) 382.50
Debit 21015010 (state tax) 205.00
=================================
Credit 962.50
Debit 962.50

The credit must always match the debits.

Shirley