BUSINESS ADMINISTRATION
FINANCIAL ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Debit payroll Deduction Expense, Medicare Payment, Social Security Payment:Credit Cash
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Debit Business Tax Payable, Medicare Payment, Payroll Expense; Credit Capital
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Debit Cash; Credit employee income tax payable, Medicare payable, social security payable
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Debit employee Income tax payable, Medicare payable, social security payable, credit cash
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Detailed explanation-1: -Companies record income tax expense as a debit and income tax payable as a credit in journal entries. If companies use the same cash method of accounting for both financial and tax reporting, the completed journal entries include an equal debit and credit to income tax expense and income tax payable, respectively.
Detailed explanation-2: -You must record these deductions as transactions in your general ledger. To create payroll journal entries for these deductions, create a row for each type of tax titled “[tax name] payable.” Record each tax amount as a credit. Then, record the sum of these credits as a payroll tax debit.
Detailed explanation-3: -The biggest debit item in a payroll journal entry is usually the salary and wage expense. This includes all wages, bonuses and vacation payouts paid to employees. Remember to record the gross amount for each employee, not the net.
Detailed explanation-4: -The journal entry to record payment of wages to employees includes a debit to wage expense. Explanation: The journal entry to record payment of wages to employees includes a debit to wage expense as an increase in the expense is debited.