Question

Carla Corporation’s weekly payroll of $14,000 included FICA taxes withheld of $1,071, federal taxes withheld of $2,690, state taxes withheld of $840, and insurance premiums withheld of $230. Prepare the journal entry to record Carla’s payroll. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Answer 1

Answer:

Debit Payroll expenses (p/l) $14,000

Credit Cash account  $9,169

Credit FICA Taxes payable $1,071

Credit Federal taxes payable $2,690

Credit State taxes payable  $840

Credit Insurance premium payable  $230

Being entries to record payroll expenses and the deductions withheld.

Explanation:

The weekly payroll of $14,000 is an expense to be recognized as a debit in the income statement. The net amount of this expense after the deduction of all statutory deductions and the insurance premium is paid to the employees. The deductions where withheld (yet to be remitted to the appropriate bodies) is a liability to the company. To account for this,

Debit Payroll/Employee expenses (with the gross amount)

Credit Cash account (with the amount paid to employees)

Credit Payable accounts ( with the amounts withheld)

The cash paid

= $14,000 - $1,071 - $2,690 - $840 - $230

= $9,169