At the end of each month, a company pays its employees. Payroll information below is for January, the first month of the fiscal year. Assume that none of the employees exceeds the Federal unemployment tax maximum salary of $7,000 in January.           Salaries $ 1,000,000   Federal and state income taxes withheld   150,000   Federal unemployment tax rate   0.80 % State unemployment tax rate (after FUTA deduction)   5.40 % Social Security (FICA) tax rate   7.65 %   Record salaries expense and payroll tax expense for the January pay period. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)   1- record the employee salary expense and withholdings  2- record the employer payroll taxes

Q: Journalize the transactions shown

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A:

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Payroll Entries

Payroll is a comprehensive record of employees that are paid by the company. Payroll classifies employees into various categories according to their function and pays scale (basic wage, allowance, income tax, other taxes, employee loans, etc.). Payroll processes form the bedrock of every organization as it contains sensitive information on the ‘wage and paycheck’ portion of the company’s strength—its employees. The organization needs to keep a track of the employees currently on the payroll, the net payout for the company, the record of transactions related to the employees including deductions and payroll taxes to identify the liability and its effect on the balance sheet (and other financial statements). Payroll records also include qualitative factors such as the conduct of the employee.