 In this presentation, we're going to take the information from the payroll register for the first pay period of August and enter that into a journal entry to enter it into our accounting system. So we're going to create a journal entry from this payroll register. This is going to be a really important process and something that may not be concentrated as much on in some payroll classes, but from an accounting standpoint from debits and credits, really important journal entry to look at, and it's one of the longer and more complex journal entries to look at, whether we do payroll in-house or whether we do it externally, we still need to do something like this in order to get this information into our system. So it's really useful to know. So to do that, we're going to go to the next tab, this GL tab, and the GL tab is going to have a few different data inputs. These are the journal entry areas. Now I've left them all unhidden. We're going to hide some of them, just to note that we're going to have one set of general journals for each new pay period, and that'll make it a little bit easier so that we can see things side by side. But to do that, we're going to have to hide some sales. So we'll enter things into the general journal, our journal entry from the payroll register things, we'll enter the information from the payroll register to the general journal, and then we'll post that to the general ledger over here, and then the general ledger will generate the trial balance. And this will give you just a little worksheet to show you the beginning numbers at the start of this process and what's happening as we go. So to do this first, I'm going to scroll back over here, I'm going to go all the way to the left, and I want to pick up these numbers here. So we're going to say this happened in August and we're going to enter the data at the first day of the next month, so 9-1 here. So to hide all this information, because we don't need it right now, I just want to get it out of the way now, we're going to put our cursor right on this F so you can see the drop down, left click, highlight all the way over until AC. So the whole columns are highlighted, not just the segment. And then we left click or they're selected, right click, and then hide. We're going to go to this hide area down here. And then you can see it goes to ABCD and then AD, so it went all the way across. So that's what we're going to have. So now we can see this first set of journal entries right next to where we're going to post this stuff. All right, so we're going to make a journal entry now. Now the most basic type of payroll journal entry, if we were just to agree to pay someone, would be just like any other expense, it would be very easy. We'd say we're going to credit cash, we're going to reduce cash. And the other side would be a debit to payroll expense, salaries and wages expense in this case. But because we have to withhold all this stuff, it becomes much more complicated. So we're just going to pick this information up from the payroll register. So we can start with the wages expense just like you would think. Well, first you might think is cash affected, the cash is affected cash is going down. But I typically in this particular payroll journal entry think of the cash last, because it's kind of like calculating the net check. So it's going to be a credit and I'll actually put that in the final component. But if you're used to doing cash first, like I normally teach to think of cash first, you could put it up top and note that it's going to be a credit and start there. But I'm actually going to reverse that process here to try to calculate this as if it was calculating the net check. So we're going to start off with the wages expense. Expenses have a debit balance. We're going to do the same thing to it. We're going to debit the expense. So I'm going to highlight these cells. I'm going to copy this and make this a little bit larger so you can see it. So we'll highlight these, we'll copy it, and then we'll scroll back up. Now we have the account numbers here. It's just so you can see the account numbers. Right click and we're going to paste it 123 just the numbers. And then we got to pick up the debit amount. So I'm going to do this with a formula and actually go from tab to tab with a formula. So we're in D five, I'm going to say equals. And then I'm just going to go down here to the prior tab. And we're going to pick up the gross pay for the entire payroll. Now we're not going to record this. We could record this person by person. We're going to record the gross for all payroll time periods here. So there's going to be a 48, 860, 48,896. So there we have that. And then we're going to have the credits and the credits are going to be what we're going to pull out. So in essence, if we go back to the earnings record, we can see that everything that we're going to pull out over here, the deductions from the total column are going to be the credits. And they're all going to be pretty much liability accounts because we took this money from the employee and we owe it to somebody, typically the government. So if we scroll back over here, we're going to look for these liabilities. Now if we go to not accounts payable, not payroll taxes payable, these are our liability accounts in orange. And note just that this trial balance is in balance because the debits are going to be non bracketed, the credits will be bracketed. So we don't have two columns here, the credits are bracketed or negative numbers in Excel. And if we highlight the whole thing, the debits minus the credits, if we sum them up will be zero, meaning that the debits equal the credits. Current income is 500,000 income, not a loss, because it's a credit. Okay, so these are our liabilities. And we have obviously just limited the accounts so we can focus in on where we want to see this. We want to be able to post things to a trial balance so we can actually see what is happening from an accounting standpoint to the general to the trial balance to the accounts. So the payroll payable, we're actually not going to use that here. We're going to use that in the adjusting process. I'm going to go ahead and just pay it as if we're going to pay it at the same time we process payroll, which may not happen all the time. A lot of books will take it to the payroll payable first. But I'm going to save that till to do the adjusting journal entry. So this is going to be used if we need to do an adjusting journal entry. So this I'm probably simplifying it a little bit here. And then we're going to have the FICA taxes payable. So that's something that we withheld FICA for OASDI the Medicare HI something that we withheld. So we need these two, these two are going to be liabilities that we'll pick up. So I'm going to highlight both of them, right click and copy. I'm going to scroll back up, put that in B6, right click and paste 123. Now these are going to be credits because they're going to be increased on a liability account. So we're going to pick these up. Now I'm going to I'm going to pick this number up from the register earnings. But I want to flip the sign. So instead of hitting equals, I'm going to say negative and then go to the register and we're going to pick up the OASDI right there and enter. And that's going to give us the 3031. Then we'll put our cursor in E7. Once again, we'll say negative going to the register and picking up the HI, the 708.99 and enter. And that gives us the 708.99 for HI. Now if we keep going, we have Futa and Suta, but those don't come out of the paycheck. Those are those are payroll for the employer. So we're not going to do those yet. We will return to them. Once we do the second journal entry, we'll have to do it related to payroll taxes. What we do have FIT, we had to pull out group insurance, union dues, retirement plan. These are all things that we took out of the employees check. And they're all liabilities that we owe to somebody. We don't get to keep the money. So we're going to right click and copy. And we're going to put that up top and right click and paste 123. And then we'll just pick up these amounts too. We'll just the next one is FIT federal income tax. I'm just going to say negative going back to the register. And we're just going to pick up that FIT 8,599. The next one is group insurance. We're just going to say negative. Go back to the register and pick up the group insurance 5,500 and enter. Then union dues, we're just going to say negative. Go back to the register, the 16 and enter the retirement plan. I'm just going to say negative. Go back to the retirement plan. And it's 2,074 and enter. So there we have that. And then the difference then is going to be the net pay. And you can see this just mirrors what we have here. We got the debits minus all the credits will give us our net pay. And that mirrors if we go back to the register, what we have here, which would be the total wages here minus all of the deductions should give us our net pay. So this is the net pay we're looking to get to. So let's see if that happens. It should be at 2626611 net pay. That's the cash we're going to pay. Now, again, I'm going to say that the cash is actually going to get paid at this time. That might be a bit of a simplification. Also note that we could, it would be best practice really to put this first into another checking account for just for payroll and then take it out of that payroll account. So I'm going to simplify this a bit so that we have a few less journal entries to deal with. So a couple added steps might be to take the money out of the checking account, put it into another checking account specifically for payroll, then pay everything out of the payroll account. And thereby, you're able to kind of have a double check by the bank that just deals with payroll when they issue the payroll checks. But again, we're just going to take it out of here to limit this problem a little bit. It's a long problem already. So we're going to say copy the cash. This is the cash that's going to go out. We're going to put that in B12, right click and paste 123. And then we'll subtract this out. So it's the debits minus all the credits or this minus all these. So this is 20,629, 89 minus the 48, 896. I'm going to do that with our negative sum or plug formula, as I call it negative sum, double click the sum function, highlight the 48, 896 down to the 2007, 74, 20. And that give us the 28, 266, 11. If we go back to the register, that should match our amount here for the net pay. So now let's record this out. And then we'll do the second component of this, which is going to be to record the employer portion. Now to record this, we might want to freeze the pains. So let's try to do that. I'm going to put my cursor on this side. I'll just put it right here on ad. And when I go to the right, I want to keep this pain here so I can see it. So I'm going to go here, we're going to go to freeze pains, scroll down to freeze pains. Now we should have frozen pain. So we're going to scroll to the right to our general journal, general ledger. And we're looking for, I'm going to scroll back up, we're looking for this one first. So this is 502 in the salaries. If we go down here, it's assets, liabilities, and then equity and then income expense. We're looking for the salaries, which is our second expenses way down here. It's going to be the same order on the GL. So here's our asset accounts and green liabilities and orange. And then we have the capital and then income and expenses. We're looking for the salaries and wages. So that's right here. And so here we have it. Now the date is going to be 911. And we're going to put it into this tab. Now note the debits and credits are in the same column. Credits will be with a negative number. All we have to do is just pick this number up. We don't need any pluses or minuses here. We'll pick up whatever the plus and minus over here. If it's a positive, it'll be a debit. If it's a negative, it'll be a credit. So we just need on this side, just to say equals. And we're going to point to this D5. That'll bring the zero up by D5, up by the 48896 to 48896. Now we'll do the same thing for the FIT. So if I scroll back over here and I just go over just a bit, it'll pop back over there. And the FIT that we need to post here it is on the journal entry. This is FICA. This is FICA for OA and here it is. So it's like our third liability. It's going to be in the same order on the GL. So we're looking for that third liability. Here's our assets and then the liabilities. So here's the FICA OASDI that's 215. That's going to be the same date. 911 is our date. And then the amount is going to be here in AT. We're going to say equals and point to that 3031.55 and enter. And that'll bring our totals up. We scroll back over. That total note should be here. It shows up here as well. So here's the 3032. It's rounding here. So we took the panties off in other words. And then the other side was down here. Here's the wages. Okay. And then now we're going to do the HI. So here's the HI 220. If I scroll back over a bit we got the 220 here. That's we're going to post it fourth liability account. If I scroll to the right we have assets. We have liabilities. We're looking for the HI. So here it is. So it's in AW6. So I'm going to say 911. And then in AX6 we will say equals. And then point to that 708.99 in E7 and enter. So there it is on account 220 has that 708.99. If I scroll right back over on this side and go to the right just a little then there it is 709. We can see we're out of balance here because we haven't completed this yet. So we'll keep going here. We got the FIT which is the 225. So that's going to be here. So it's like in the middle of all of our liabilities are slightly towards the end. So if we scroll back over to the GL we have our assets our liabilities. We're looking for accounts 225. So here's 224. So 225 is right there. So it's in cell BE6. We're going to say the date is 911. And then in BF6 we will say equals and point to that 8,599.13. Enter brings the balance up to 8,599.13. If I put my cursor right on the other side of this frozen pane go right then we'll see that information here. The FIT bringing up the FIT. Okay so then the next one is going to be the group insurance the 243. Here's 243 on the trial balance. Same ordering on the GL assets liabilities. And there's 243 over here. 243 we're going to be in cell BE2191 tab. And then in BF21 we're going to say equals. Scroll back up and we're going to point to that 243 that 5,500 and a penny. So there it is. And then if we scroll right on the right side of our frozen panes and go to the right or the left side of the frozen panes and then go to the right. There it is our group insurance. Next one the union dues 245 that's going to be the next one down 245. So if we scroll back over and to our general ledger looking for 245. So there's 244 or 245 must be up here then. There's the two actually it's over here 245 that's going to be on 91 date. And then in cell BJ6 equals we're going to go to the union dues 16 bringing the amount up from zero by 16 to 16. Then if we put a cursor right on the left side of the frozen pane and scroll right and then go down there's our 16. Next retirement plan 247 is 247 last liability account scrolling to the right to the last liability account. We're going to pick up the retirement plan. Here's the 247 scroll down a bit. We're going to be in BI 2191 tab and then in BJ 21 equals we're going to point to that 2007 7420 and enter. Then if we scroll back over I'm going to put my cursor on the left hand on the left hand side of the frozen panes and go right and then there's our retirement plan entry. Then we're going to go to the checking account. That's going to be our first account up top. Here's our checking account first account on the general ledger. So here it is it's going to be the date 91 and the amount in AL6 will equal and pointing to that 2826611 bringing the balance down to 571 733 89. That amount matching here except we took the pennies off and then if we scroll back down we should be back in balance. So we're back into zeros meaning the debits minus the credits equals zero meaning the debits equal the credits. We see that net income went down by 48,896 here from 500,000 to 451 104. Now note that we have this all went to expenses so the expense of salaries and wages not payroll tax expenses because even though we withheld a lot of payroll taxes these are the employees payroll tax. So the expense to us is really the wages expense not payroll tax expense when we record this and that's really a key that people get confused all the time. So note that although we withheld payroll taxes and we owe payroll taxes it's this side of the journal entry are not our payroll taxes they're the employees payroll taxes and to us they're just payroll expense. Now we're going to record our payroll taxes which is our portion of the of the social security our portion of Medicare our portion or we all have the whole portion of Futa and Suta. So that's going to be our second journal entry we're going to have to put together here and that's going to be I'm going to skip a line and we'll put put that on the next journal entry down here I should have frozen a bit over so we can put a date here so we'll have to unfreeze and put a date here but I'm going to skip a line and we're going to start this journal entry on another line. Okay so that the next transaction is that we're going to have our expense portion so this is going to be our portion where they I'm I'm assuming we're the owners so we're taking the perspective of where the owners in this problem. So that means that we're going to have to pay our portion of FICA taxes social security and Medicare and the Futa taxes and we're going to have to record the expense related to it so I'll start with the expense down here so payroll tax expense is going to go up so I'm going to highlight these two you know right click and copy that's going to be our debit so we'll put that on top so in b14 right click and paste one two three now I'm not going to put the amount right now because I'm going to calculate the debit after we put in all the credits which will be all the all the stuff we owe so we process payroll and we owe I'm just going to copy these FICA again so we have to do this again we have it up here but this is our portion now FICA for OASDI HIF Social Security and Medicare Futa Federal Unemployment Tax Suta State Unemployment Tax Act that's why I have an A on it but then we're going to copy those right click and that's going to be our credit so we're going to put that in b15 right click and paste one two three and so we're going to start here and I'm just going to pull these from our register again from our worksheet so I'm going to start with the liabilities this is what we owe so I'm going to put it as a credit not hitting equal but negative going back to our register and that's going to be all the way to the end in this yellow area so we're going to pick up the OASDI which does match it's the same but we want to pick it up from you know this part of our register and then the Medicare negative going back over to this item the HI enter and then negative of the Futa going back over to the register that's going to be the Futa 125 38 enter and then the Suta negative going back over to the register picking up the 867 56 and enter so there's that information and then the sum of that will be the expense if we add those up four set four thousand seven thirty three forty eight I'm going to do that with the negative sum formula so we'll be in d14 negative sum double click the sum now if this is in the way you can move it out of the way just just move it here and then I'm going to highlight the whole thing and enter so then the debit sequel the credits here so that sums up to zero all right so now we'll post this so here's the 520 way down here 520 same order on the general ledger so I'm just going to go to the right here's our assets and green liabilities and then we have the here the income and expense over here so here is our wages expense we're going to be up here in the payroll tax expense this is in nine one again so we are in br six br six equals scrolling down just a bit we're picking up that four thousand seven thirty three forty eight and there it is if we scroll back over to the trial balance it will have increased the taxes here so here it is starting at zero up to the four thousand seven thirty three now we're going to point post the oh a sdi that's going to be up here third liability scroll into the right to find it here's our assets here's our liabilities we're looking for the oh a sdi so it's here and nine one so we're in eighty seven equals and we're going to point to that three thousand thirty one fifty five it's going to be the same looks the same as the one above it employee portion employer portion so it's both coming going into our liability account but one's the employee one's the employer portion going to scroll back over now we need to pick up the hi here it is here here it is on the trial balance it's going to be in the same order on the general ledger scroll into the right looking for hi so here it is two hundred and twenty so in a w seven we're going to say this is nine one in a x seven this equals and we're going to scroll down just a bit there's our hi seven oh eight ninety nine and enter so again it's doubled up here there's the sum one thousand four seventeen scrolling back over we can see that that sum here is here and that of course is is adding up to the total then we have the futa so that's the two twenty three so if we scroll back over here's futa two twenty three so it's like the middle account same order on the general ledger scroll into futa we're looking for two twenty three two twenty two twenty three here it is so we are in a ba six we're gonna say nine one and then in bb six we're gonna say equals scroll down and point to the futa one twenty five thirty eight and enter so there's futa one twenty five thirty eight and i'm going to put my cursor back on the left side and go to the right just a tab and then there's futa then we're going to go to su ta the twenty two twenty four here's two twenty four on the trial balance scroll into the right here's our assets here's our liabilities i'm going to scroll back up a bit we're looking for two twenty four so scroll down a little bit here it is on ba twenty so this is going to be nine one in bb twenty we're going to say this equals and point to that eight sixty seven fifty six in e uh eighteen and enter so there's our eight sixty seven fifty six if we put our cursor to the left of the frozen pane then go to the right we should see that information here so here's futa here's su ta and that puts us back in balance here and here's our journal entry uh going from the the salaries uh going going up and then the payroll portion of it so there's our our two journal entries now we're going to post one more journal entry here and this one we're going to say is happening in the middle of the month meaning we're going to then pay all this stuff at some point in time and that's going to be the next transaction we're going to have so this one's going to be happening on nine fifteen meaning we process the payroll on nine one for the month ended august at the end of august uh and then we're going to have to pay it so we're going to keep jumping forward in time here we're going to say we have to pay it basically by the middle of the month so now all this stuff that we owe that we that we took from the employees and that we owe as our payroll taxes we have to pay to somebody and we're basically just going to be dealing with the payroll taxes here so we're going to be dealing with these items that we're going to have to pay out so um we'll show that information we're going to pay it off with of course cash so i'm going to do the cash last because i want to put it on the bottom so again if we were to do this journal entry we're going to say is cash affected yeah and it's going to be the um but we're going to put the cash on the bottom so we're going to credit cash and we're going to debit all these accounts that we're going to pay when we pay the government when we pay the government for the federal government for social security medicare and futa and in the state government for suta so we're just going to copy all these now going to highlight all these right click and copy we're going to go to sell b20 right click and paste one two three and then we're just going to pay these out so whatever is in there right now we're going to pay out so there's the 6063 it's a debit it's a credit here we're going to pay it so we're going to debit it to make it go down to zero then the 1418 here for hi then the 125 and then the 868 so we're going to pay these out and then we're going to pay that of course with cash so cash is a debit balance we're going to make it go down doing the opposite thing to it a credit so i'm going to highlight the cash right click and copy we're going to scroll back down to b24 right click and paste one two three and you just add these up adds up to 8474 i'm going to do that with our negative sum function it's going to be the negative sum double click the sum highlight from 6063 down to 868 and enter so now the debits equal the credits and there we have it so we're going to post this out and this will bring these all back down to zero so we've recorded the fact that we owe the liability now we're going to pay the liability with cash so here's our 215 here it is on the trial balance we're going to scroll back over and find 215 in the general ledger so here it is on the gl this is going to be on 915 now and we're going to say that this equals an 88 equals that 6063 and enter so that brings it back down uh well we're missing 10 cents and that's because i can't see the 10 cents on the trial balance so we should probably add uh pennies here so we can see that i'm going to go ahead and do that for so i'm going to highlight these go to the home tab and we'll add the cents that means we're going to have to wind it out just a little bit so there we go so there we so now we can see the pennies so let's re-enter uh these numbers and bring out the make sure we get the pennies in there because we do want to be more exact with the payroll so this is going to be point one and that'll take care of it it went down to zero now and this is going to be 1418.98 this is going to be 125.38 this is going to be 868.867.56 and then this number should take care of itself because it's just highlighting if we use that plug formula okay then we'll get to the 220 here's the 220 now this formula it already picked it up so it went back down to zero here because uh we used the formulas so now we're going to go to the 220 count 220 here's 220 in the trial balance same order on the general ledger scrolling back over scrolling back up scrolling back over here's 220 it's going to be on 915 we're in AX so AX8 equals when it's scrolled out back down just a bit and pick up that 1418.98 and enter and it's off by dollar i'm going to undo that it should be 1417.98 so i'm going to double click on this it should be 1417.98 scroll back up let's do this one more time so AX so this by the way of course these should be there when you when you work the problem it'll have the pennies so you don't have to suffer through this hopefully maybe i'll edit this out but anyways equals the 1417.98 enter that brings us down to zero i'm going to put my cursor on the left side of the of the frozen panes go right and so that's down to zero now now we're going to the futa so here's the futa uh 223 here it is on the trial balance we're going to scroll to the right looking for 223 scrolling back up looking for 223 scrolling to the right looking for 223 it's in BA7 this is going to be 915 and then in BB7 we're going to say equals scroll back down and we'll pick up that 22538 bringing us back to zero i'm going to put my cursor right on the left side of the frozen panes and scroll right so it'll go back over there and there it's back down to zero one more we got suta or two more suta and that's going to be suta is here and so it's going to be in the same order on the trial balance we'll scroll to the right looking for suta so here it is 224 so i'm in BA21 so BA21 915 we're just going to say in bb21 equals and point to that 867 56 bringing us back down to zero then we'll put our cursor on the left side of the frozen panes and go right and so we brought that back down to zero so all of our payments are down to zero uh except for the fit which we also need to pay so i'm actually going to adjust our formula and include fit here so i'm going to move the cash down i'm just going to delete it i'm going to highlight these delete that and then the fit we we also have to pay so i'm going to highlight the fit right click and copy we'll put that on the bottom right click and paste 123 and the amount there is going to be uh 8599.13 then we'll go to cash so scrolling back up cash will be credited right click and copy scroll back down put that in b25 right click and paste 123 then if we highlight this it's going to add up to 17,073 15 cents we're going to do that with the negative sum the plug formula negative sum double click highlight the information or select the information and that adds up to 17,735 if we add the whole thing up sums up to zero okay so now we're at the 225 so 225 is here uh 225 is here on the trial balance if we go to the right we're looking forward on the general ledger now looking for accounts at 225 we'll scroll back up there it is so in BE7 we're going to say 915 and in BF7 equals scrolling back down we're going to pick up that 8,599.13 and enter so that brings FIT back down to zero if we go to the left of the frozen pains scroll right and scroll down okay so now we've paid that off now we're not going to go with the group insurance and the union dues we would have to pay that out uh somewhere that the retirement contributions we won't get into obviously we got to have a fund for the retirement contributions we won't get into how to um account for the for the retirement contributions here we're just going to note that those are going to be withheld and obviously our due on behalf of the employees as something that was withheld from the employee paycheck we're basically going to be focusing in here on the payroll taxes okay so now we'll just post the cash out here's cash here's cash up top first account on the general ledger so we're in AK7 915 and then in AL7 equals scrolling down picking up that 17,073 and enter and that brings cash down okay so if we scroll back back over then we should be back in balance so the green zeros put us back in balance and uh note that this journal entry doesn't affect net income there's no income statement accounts no income no expenses or payrolls all we did was pay off the uh liabilities we owe these payable accounts payroll payable accounts acting just as accounts payable does meaning they went up when we owed the money when we processed the payroll and hadn't yet paid it then we paid it they went down when they went up so did the related expenses of salaries and wages expense and payroll tax expense and then when we paid it off nothing happened to the income statement we just paid off the liability and decreased the cash account