Financial Accounting, IFRS Edition Chapter 10 Liabilities Financial Accounting, IFRS Edition Weygandt Kimmel Kieso

Payroll-Related Liabilities Appendix 10D Payroll and Payroll Taxes Payable The term “payroll” pertains to both: Salaries - managerial, administrative, and sales personnel (monthly or yearly rate). Wages - store clerks, factory employees, and manual laborers (rate per hour). Determining the payroll involves computing three amounts: (1) gross earnings, (2) payroll deductions, and (3) net pay. SO 12 Prepare entries for payroll and payroll taxes under U.S. law.

Payroll-Related Liabilities Illustration: Assume a corporation records its payroll for the week of March 7 as follows: Mar. 7 Salaries and wages expense 100,000 FICA tax payable 7,650 Federal income tax payable 21,864 State income tax payable 2,922 Salaries and wages payable 67,564 Record the payment of this payroll on March 11. Mar. 11 Salaries and wages payable 67,564 Cash 67,564 SO 12 Prepare entries for payroll and payroll taxes under U.S. law.

Payroll-Related Liabilities Payroll tax expense results from three taxes that governmental agencies levy on employers. These taxes are: FICA tax Federal unemployment tax State unemployment tax SO 12 Prepare entries for payroll and payroll taxes under U.S. law.

Payroll-Related Liabilities Illustration: Based on the corporation’s $100,000 payroll, the company would record the employer’s expense and liability for these payroll taxes as follows. Payroll tax expense 13,850 FICA tax payable 7,650 Federal unemployment tax payable 800 State unemployment tax payable 5,400 SO 12 Prepare entries for payroll and payroll taxes under U.S. law.

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