Payroll - Employee
An enterprise has many expenses and payroll is not exception. However, the accountant must look at this in two ways. Primarily, the enterprise incurs a wages or salaries expense. This would be the total cost to the company of employee services provided. The employee would receive his or her hourly pay or biweekly salary but would take home something less that the total expense to the firm. Why? The government has taxes it levies on employees for withholding federal income tax, social security tax, and medicare tax. The government puts the burden on you, the business, to collect these taxes. Therefore the entry would be as follows:
| Dr. | Cr. | |
| Wage/Salaries Expense | XXXXXX | |
| FIT W/holding Payable | XX | |
| Social Security Payable | XX | |
| Medicare Payable | XX |
Your expense is Wages/Salaries, but since you have to collect these taxes it is payable by you to the government. The payroll information is kept by employee and is entered in the payroll register.
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- John Templeton, HCCS Accounting Instructor
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