Accrued Payroll Journal Entry Example
Accrued payroll refers to the wages and salaries that have been earned by employees but not yet paid by the end of an accounting period. Accrued payroll is recorded as a liability on the company's balance sheet. Here are some common journal entries for accrued payroll.
Example: Accrued Payroll
Assume a company has employees who have earned ₹50,000 in wages by the end of the accounting period, but these wages have not yet been paid.
Accrued Payroll Journal Entry
| Particulars | Debit (₹) | Credit (₹) |
|---|---|---|
| Wages Expense A/c | 50,000 | |
| To Accrued Payroll A/c | 50,000 | |
| (Being wages accrued but not yet paid) |
Payment of Accrued Payroll
When the company eventually pays the accrued wages in the following period:
| Particulars | Debit (₹) | Credit (₹) |
|---|---|---|
| Accrued Payroll A/c | 50,000 | |
| To Cash/Bank A/c | 50,000 | |
| (Being payment of accrued wages) |
Detailed Examples:
Example 1: Recording Employer's Payroll Taxes
Assume the employer's payroll taxes amount to ₹5,000.
| Particulars | Debit (₹) | Credit (₹) |
|---|---|---|
| Payroll Tax Expense A/c | 5,000 | |
| To Payroll Taxes Payable A/c | 5,000 | |
| (Being employer's payroll taxes accrued) |
Example 2: Payment of Employer's Payroll Taxes
When the company pays the employer's payroll taxes:
| Particulars | Debit (₹) | Credit (₹) |
|---|---|---|
| Payroll Taxes Payable A/c | 5,000 | |
| To Cash/Bank A/c | 5,000 | |
| (Being payment of employer's payroll taxes) |
These journal entries help in accurately recording the financial obligations related to payroll, ensuring that the company's financial position is correctly represented at the end of each accounting period.
