Payroll accounting deals with calculations and distributions of employee’s compensations like salaries, bonuses, commissions, overtime pay. It also helps higher level management to make decisions about labour cost.
Type of payroll accounting includes −
Initial recordings − Records gross wages, employment taxes which are owed to government
Accrued wages − Records wages owned to employees which are paid later. Readjustments are made after payments.
Manual payments − Records when company pays manually for pay adjustments or employee terminations.
Steps for payroll accounting includes −
Steps to record payroll in general ledger are −
General example for journal entry
An example for journal entry is explained below −
|Federal income tax withheld||XXXX|
|FICA Taxes payable||XXXX|
|Union Dues withheld||XXXX|
Payroll accountant duties includes the following −