Exam 10: Payroll Liabilities

Since payroll taxes are levied on wages actually paid, there is no legal liability for payroll taxes associated with the accrual of wages.

An employer incurs a Canada Pension Plan expense equal to the sum of the CPP withheld from the wages of all its employees.

The statute that requires an employer to complete a record of employment due to termination, illness, injury or pregnancy is called the

After posting the entries to record salary expenses and payroll tax expenses, the income taxes payable account of Halpha Company has a $9,000 credit expense resulting from income taxes.

The payroll tax liabilities arising from a given pay period are likely to be smaller than the payroll tax expenses.

To account for vacation pay, an employer should estimate the amount to be paid and record it as an expense of the weeks during which the employees are working and earning the vacation time.

An amount of an employee's annual earnings not subject to income tax is the

The payroll tax liabilities arising from a given pay period are likely to be larger than the payroll tax expenses.

In accounting for payrolls, the Payroll Register is a book of original entry which is used for journalizing payroll information.

The Payroll Register is generally used to post information directly to the accounts.

The payroll records of Jasper Co. provide the following data for the weekly pay period ended March 7. CPP is 4.95% and EI is 1.66%. 1) Prepare the general journal entry to accrue the payroll on March 7. 2) Prepare the general journal entry to record the payroll tax expense for March 7.

Employers and employees both must pay Employment Insurance based on a percentage of the employees' total wages, up to a yearly maximum.

Federal income taxes are withheld from wages earned, except the withholding stops each year as soon as the employee has earned $34,900.

Employment Insurance is levied equally on the employee and the employer.

In some jurisdictions, paid annual vacation pay is mandatory and required by law.

If a company experiences a low turnover rate, vacation pay should be expensed when an employee actually takes the vacation.

Employee income taxes are paid solely by employers based on a percentage of total wages earned by the employee.

A Payroll Register is a record for a pay period that shows the pay period dates and the hours worked, gross pay, deductions, and net pay of each employee.

Williams Inc. has collected payroll data for the most recent weekly pay period. CPP is 4.95% on the annual pensionable earnings of $50,100 ($55,900 maximum with the first $3,500 exempt), matched by the employer, and EI is 1.66% to a maximum of $51,700 annually, with the employer paying 1.4 times the employees' contributions. Williams' pension plan allows the employee to make designated contributions which are matched by the company. F.Fillip is an administrative employee, and the other employees are shop workers. Employees are paid time and a half for any overtime work. Prepare the journal entries to record:(a) The payroll accrual.(b) The employer payroll tax expense.(c) The employees' fringe benefits. *Note that K.Frank would have already paid the maximum CPP and EI for the year.

Since federal income taxes withheld from an employee's wages are expenses of the employee, not the employer, they should not be treated as liabilities of the employer.