 in this discussion we will discuss the discussion question of discuss the journal entry related to pain payroll tax liabilities so we're talking about a payroll journal entry and we can kind of think of the payroll journal entries as a few different components to them i'm going to list basically three payroll journal entries there could be more but i'll give i'll give the three and try to give a distinction of where we are focusing here it's important to note that the payroll journal entries are usually some of the more complex journal entries very good practice to learn payroll journal entries and journal entries that most don't understand so if we have an understanding of the payroll journal entries they really help us just to understand how to record normal journal entries and again you probably know more from basically just how to record journal entries and from recording payroll than many individuals and also even people that are working in payroll when we work in payroll we often are so concentrated on tables and making sure that the tables are correct in terms of our register and whatnot and calculating the taxes that we don't spend as much time or people specialize in creating the tables and and don't and possibly the journal entries might be a separate type of thing to many people in other words so it's really good to know the payroll journal entry so that we can record the payroll journal entry and know how it how it is happening it will be necessary to to get the payroll journalized into our records in some format even if we are outsourcing payroll so we still need to get the information into our records the most basic way to do that or the most general way to do that would be with it with a payroll just one payroll journal entry to record that a more detailed way would would be to get all the data related to each individual register needs to be individual check but in any case whether we do the payroll in-house or whether we do it out of house whether we do it in our accounting department or we outsource it to some contractors such as paychecks or ADP or somebody we still need to get it into our system some way be able to interpret it once there and therefore need to understand payroll journal entries so this payroll journal entry is talking about the pain of the liability so I would think of the payroll in kind of three steps at least one would be recording the employee live the employee expense that would be the main journal entry that would be focused in on the register the calculation on the register of net income meaning gross income minus all of the stuff all the withholdings to get to net income and then there's going to be a journal entry related to the employee or taxes which would be just the employer portions which would be employer futa all of futa's employer but it would be social security employer it would be medicare employer portion and then futa would be recorded as components of the employer or taxes and then at some point in the future once we've recorded the liabilities related to the employee taxes and the employer taxes would now be recorded as liabilities something that we then owe we would then need to pay them periodically and that's where we are concentrated in on now paying off the liabilities that have already been put in place once we record the payroll process and therefore owe liabilities related to the the employer and employee portion of payroll taxes now when when do we actually pay the liabilities could differ depending on what our payroll circumstances are meaning the requirements for payments typically we have to pay more frequently the more our payroll is the higher dollar amount our payroll is and the more employees we have so we'll have to pay it of course at some point after the payroll happens to we'll have to pay the liabilities but when do we have to pay them could differ now in terms of the liabilities there could be you know i mean in terms of the journal entries there could be you know more journal entries based on like we could transfer money from a checking account to the payroll account before we do the journal entries and we could have a journal entry that processes the payroll at a separate time and then we pay it later so the journal three that we talked about is kind of a summary of the of the main big journal entries we would think of for the for recording the payroll so at this point in time we're actually paying the payroll so that means if we imagine and it's always nice to be able to envision and imagine the trial balance we would think that there's going to be liabilities on it related to payroll taxes due to the processing of the payroll both employee and employer portion in other words we should have on the trial balance the fact that we owe federal income tax for both employee and employer portion as a liability account we should have on the trial balance the fact that we have Medicare tax for the employee and employer portion a liability with a credit balance then we have the food to tax which is only going to be the employer portion because there is no employee portion that we owe a liability and then we have the federal income tax which represents only the employee portion that we pulled from the paycheck it's just going to be the employee portion of taxes that we will owe so federal income tax social security medicare and food to are going to be included in the taxes we owe when we make the journal entry it's pretty straightforward it's just like it's just like an account's payable it's just like any payable account that became due we're just going to make the payable account go to zero and pay it off it's just like if we paid off a credit card if we bought supplies on a credit card are on credit on account we would buy the supplies for a hundred dollars and we would debit supplies we would credit payroll we would credit not payroll we would credit accounts payable a liability and then later on we would pay it with cash crediting cash debuting the payable to make it go back down to zero same thing is happening here and these liabilities are a result of something you know that happened we had employees work for us and therefore they incurred payroll liabilities and we did and now we're paying off the obligation that we owe that obligation representing money that was taken out of the employees paycheck and money that we owe just for payroll taxes for being able to have employees so all those liability accounts we listed them need to go down they're all liability accounts so we're going to make them go down by doing the opposite thing too that has their normal balance which in this case is a debit so we will debit the liability accounts of federal income tax payable Medicare tax payable Social Security tax payable Futa tax payable for whatever we owe and then we're going to credit of course cash so we're going to credit the cash the actual payment that will be coming out of our checking account note that if we were actually going to write the checks we may have to break out that the payments that we have depending on whatever regulations we have so this is basically just a general journal entry that would be reducing all payable accounts we might have to to group together say Social Security Medicare and FIT and Mabel maybe Futa we break out separately but in any case whether it be one journal entry or two we're going to debit all of the liability accounts down to zero for whatever we owe and we're going to credit the cash for the amount that we pay the results if we post this to the financial statements would be the liabilities decreasing to zero for federal income tax for the for the employee or you know payroll taxes and the the Social Security and Medicare employee and employer going down to zero and the Futa going down to zero if we're paying off all taxes basically owed for the prior pay period and then cash would be going down by by the amount owed for those payroll taxes the effect on the income statement is none so just like if we paid off the accounts payable we're only paying off liabilities the effect on the income statement including the are already there because they happen when payroll was processed they happen when we recorded the employee payroll expense and employee payroll tax expense for the employer tax expense and simulation and the simulation