Accounting Demystified

Payroll Taxes Payable

Whenever we accrue Salaries payable, we should also record the payroll taxes that we are responsible for paying (the employer's share) on those accrued salaries. This might include social security, Medicare, federal unemployment, state unemployment, workers' compensation, and disability. We record the items by debiting expense and crediting the liability (the payable). Let's say the accrued payroll totaled $100,000 and the relevant payroll taxes were social security (6.2 percent), Medicare (1.45 percent), federal unemployment (0.3 percent), and state unemployment (0.25 percent). An example of the journal entry is:

Another ...