 In this presentation we're going to take the information from our payroll register for the second month of the operations of payroll the month of September and record it into our journal entry into the general journal and the general ledger and the trial balance. Remember this is a process that many people many accountants don't fully understand so if you can really understand these payroll journal entries then you're understanding debits and credits really even if you're not processing payroll by the way you're still understanding really well and you're getting a good concept of how to record and post journal entries that are probably some of the more complex journal entries that we will see so to do that I'm going to do September we're going to do September here now there's still a situation of us having to pull over the wrong information possibly making a mistake and pulling over the wrong information so to make sure to pull over the right information we may want to make this green again and then freeze our pains so that we can see the header column so to do that I'm going to put my cursor on B12 and highlight all the way over to B15 right click and go to the paint and make that green then we're going to scroll up top and I'm going to try to keep this header row now so to do that we'll put our cursor right here on B4 make sure you're scrolled all the way to the top and then go to the view tab up top windows group and freeze pains and freeze that pain okay pain is frozen we're scrolling down so we can just see September we can see the headers this is the information that we want to pull from we're pulling from the totals so the blue area right under the green area is where we want now we put this information on the second tab here so it's the gl tab so we're going to have to go back and forth a bit from tab to tab to pull the information to the gl tab to make the journal entry so let's go over to gl tab now last time we were here we left off entering this information for the first pay period and we were out of space here so what we want to do is is uh unhide some cells and and then get to a situation where we can enter data as easily as possible so to do that see how it goes from bc de and then it goes to ad I'm just going to highlight over this cell where I know there's some hidden cells right here so we'll put our cursor right on the e so it has this drop down left click and then go to af let go put your cursor on the selected area and right click and unhide so here's our data and if you go to the right too there should be I'm going to unhide to the right and also you may have the frozen pains still in place here so it's if something's happening that's funny such as I can't get over to column a sometimes that's a hidden pain over there or it's it's the pains are still frozen so if we go to the view tab up top windows freeze pains we want to unfreeze pains right now so we can see everything and then if we scroll over we can see our dates here okay so now what we want to do is I want to freeze the pains just to have the information where we want to put the input so that's going to be here in columns g to k so I'm going to I'm going to hide these cells over here we don't need these anymore so I'm going to put my cursor on f all the way to to a make sure you'd select in the whole column right click the selected area and hide and then we're going to do the same for this for the sheets to the right that we don't need right now so from l I'm going to put my cursor right on l we are going to put our cursor on l and go all the way to the right to ad let go right click and hide okay so here's the data that actually I'm going to unhide that I like to have that little space there so we're going to go from l and I'm going to go to ac so we have this ad is a little space and so we'll have that so we'll hide so if you wanted to unhide and do that again to unhide you have to just highlight over the highlighted area and it doesn't matter how many rows you go over so if you wanted to unhide right click unhide and then do the process again okay so now we're going to enter this information we're just going to pull the information remember there's going to be two journal entries to record the payroll and then one to record after the payroll is over the actual payment of payroll first journal entry will be the employee payroll earnings that we're going to have to record then the employer portion that's how I would think of it we have an employee journal entry and then an employer journal entry and then we're going to have to pay the what we withheld from the employees and what we owe for the employer payroll taxes so to do this we're going to say first the employee and again if you think about the the most common or easiest way that payroll would be recorded that's kind of a good place to start what would you do if we didn't have all this payroll withholding stuff you would just probably say well cash is going down I would credit cash and I would debit payroll expense or something like that salaries and wages expense that would be it very soon be as easy as any other journal entry but now we're going to do all these withholding so it's still the basis it's still there cash is going to go down but I'm not going to start with that I'm going to format cash at the end because it'll look kind of like the gross check going to the to the net check the cash being the net check so that'll be a credit at the bottom of the journal entry and so we're going to start with the expense which will be the first thing we saw the expenses go up expenses that debit balances we're going to start with salaries and wages so we're going to copy salaries and wages that'll be our starting point we're going to put that in h5 right click and paste 123 okay so then if we get the information from our register we'll go back to our register now the total earnings then are going to be the earnings here now we could pick this up with a formula so i'm going to go back to it so i'm going to jump back and forth here we're going to go back to the gl we're going to be in j5 and i'm just going to say equals jump back to the register tab and we want to pick up that 48 77 50 and enter so there we have that so then what we're going to do is we're going to do mimic basically what we have here so if i go back to the register we're just mimicking everything that's going to be pulled out and that's going to include oh a sdi social security hi medicare f it federal income tax group insurance union dues 401k and that'll give us the net pay so let's do that we're going to start with oh a sdi if we scroll back over here to the gl so where are we going to put that it's not going to be an expense it's going to have to be some credit because it's going to have to reduce this amount here it's going to be a liability it's going to be something that we took from the employees paycheck that they earned we're taking it from them we don't get to keep it it's not credit to revenue for us it's going to be a credit to these liability accounts so here we have fica uh for social security medicare not f it or suta yet those are employer taxes so i if i hold down control then we're also going to pick up i'm going to skip those two i'm going to let go i've let go of my mouse i've highlighted these two selected them let go of my mouse and then hold down control we are going to pick up f it group insurance union dues and retirement so note i can select all of these even though there's kind of a space here a gap by selecting these two and then holding down control and selecting the rest of them and we can copy them all then at the same time or we can do them one by one or we can type them in over here that's either way works right click and copy and then we're going to scroll up top we're going to put that in h6 right click paste 123 now we just need to pull over this information they're all going to be credits they're all going to be liabilities going up so in k6 i'm going to put not equals but negative go back to my earnings record our earnings record we're going to say this is the oast i in in 16 and enter i'm just going to do this all the way down here's hi i'm just going to put negative instead of equals to put a credit go back to the earnings record here's the hi and enter we're in the fit we're just going to say negative go back to the register fit and enter here's the group insurance we're just going to say negative go back to the register there's the group insurance and enter here's the union dues we're just going to say negative go back to the register union dues and enter here's the 401k retirement plan we're going to say negative go back to the register pick up the 401k and enter so there's our information and note that the debits don't equal the credits the credits equal 20 374 the depth 27 cents the debits equal the 48 the next step is to have the plug i use it as the plug and the check figure what should the plug be cash the cash that's going out how should that match the register it should be equal to the net check 27 705 23 so let's see if that's the case that'll be our kind of our check so we'll go back over here and uh i'm going to use our negative sum formula the plug formula equals negative sum double click the sum highlight the 48 77 down to the 2007 74 and enter so there we have that and then we're going to put that to cash so we're going to highlight the 100 and the cash checking account right click and copy we're going to put that in h12 right click and paste 123 so there's our information now we'll post this transaction to the general ledger uh to do that we're going to post first the uh this item here now we might want to freeze the pains so i'm going to scroll up just a bit and go to this cell and ad1 and i want to be able to see this screen no matter where we go on the other side here so to do that we're going to go make sure you're on ad1 then go to the view tab windows group and freeze pains and freeze the pains now if you can't freeze the pains for any reason that's okay it'll just take a little bit more scrolling to to to pick up this information so we're going to have this uh in 502 if we scroll down it's an order assets liabilities and then equity and income here's 502 on the income statement if we scroll to the right to find 502 it's an assets liability equity uh here's still liabilities and here's the 502 it's in all the way over here in bm 19 where we will say 10 1 and we want to pick up in b in 19 equals scroll up just a bit and we're picking up that 487 750 and enter so there's our information it brings the balance up from 48896 by 487752 9697350 if we scroll back over i'm going to put my cursor right on the left side of the frozen pains and go right and there's our information right here on the trial balance okay so then if we scroll back up i'm going to make this a bit smaller so we can see this all on one screen we're going to pick up this um 215 so uh count 215 if i scroll over accounts 215 i'm going to make this a little smaller if we scroll back down we're looking for 215 that's going to be this item so it's going to be the same order on the gl third liability account scroll to the right if we scroll down on just a bit we got 213 and then here's 215 so we're picking it up here on as9 we're going to say uh 10 1 tab and then in at9 we will say equals and we're going to pick up this 298081 and that'll bring the balance back up to that 298081 if we put our cursor right to the left of the frozen pains and scroll right then we'll see that information here as well now we're going to go to 220 so 220 is going to be the next item down here's 220 we're going to scroll to the right and see if we can find 220 so here's 215 here's 220 so we are going to be in cell aw9 date is 10 1 and then in ax9 we'll say equals and we're going to point to that 697 12 bringing the balance up to 697 12 and it's it's rounding a bit differently oh it's because of rounding here so we'll be okay with that we're going to go to the left we're going to go right one and so there's our information there now we're going to go to 225 so 225 if we scroll back to the right we're looking for 225 so here's 223 there's 225 so once again date 10 1 we're on BE 8 now BF 8 and we're going to pick up the information by saying equals and we're looking for 225 which is this 8404 and enter then we'll go right to the left of the frozen pains and scroll right once and there we have our information here okay so now we're looking for 243 here it is in the journal entry here it is on the trial balance if we scroll right looking for 243 and there it is so 243 scrolling down just a bit this is going to be in BE 22 we're going to say 10 1 and then in BF 22 equals we'll scroll up and we'll pick up this 5500 and a penny so there's that amount and then we're going to scroll to the right or let's put our cursor right to the left of the frozen pains and then scroll right once and so there's this information for the retirement plan it looks like that we put in there and now we're going to the union 245 245 so let's find account 245 scrolling to the right scrolling up just a bit here's 245 so as of 10 1 tab in cell BJ 7 equals and we're looking for 245 here's that 16 and enter bringing the balance up to 32 then if we go right to the left of the of the frozen pains and scroll right then that same information should be here as well now we're going to go to 247 the retirement plan which is down here 247 scrolling to the right to find 247 we're going to scroll to the right and there's 247 it's in cell BI 22 I'm going to say 10 1 10 1 and then in cell BJ 22 equals and we're going to pick up that 2007 7420 and enter brings the balance up then we're going to put a cursor right to the left of the frozen pains and scroll right and that same information then is that is here then we're going to pick up the cash so here's the cash on the journal on the journal entry here's the cash on the ledger the general journal be in the same area it's the first one so here it is on AK 8 10 1 here we are an AL 8 equals and we're picking up that 27705 and enter so there brings our cash to 526 955 51 if we scroll back over we see that same information on the trial balance and the trial balance should now be in balance note the result of this journal entry is that the expenses went up now of course this is giving us two journal entries now it's summing both the data but the expenses are going up and the payroll taxes have not been recorded yet and all of our liability accounts have now been increased and we're going to have to pay them at some point now that's just going to be the employee portion to record payroll now we got to record the employer portion of payroll taxes so in this case um we know that and we're first going to start with the liabilities now if we go back to our register what we're picking up this time is everything in the orange area employee or taxes social security medicare futa and suta these two are matching they're both in the employee and employee or portion but this is the employer portion that's not coming out of the paycheck futa federal unemployment tax suta federal state unemployment tax are federal only taxes they're not coming out of the state checks so if we go back to the gl then we we're going to have an expense here so looking at our general ledger then we're going to say that what we have here is the fika o asti the hi and the futa and the suta these are going to be the liabilities we need to pick up so i'm just going to highlight from a e12 down to the what is that af 15 let go of the selected area right click and copy and then i'm going to skip a line because we're going to put this on the bottom they're going to increase the liabilities and therefore be credits so we'll be on cell h 15 under the date right click and paste 123 and then the debit is going to be payroll taxes expense so remember this is the tax portion we haven't recorded any taxes yet even though we had liabilities related in the prior journal entry this is the only employer taxes that we have so these are going to be debits they're going to go up in the debit directions we'll right click there copy that put that on on top in h 14 right click and paste 123 all right so we're going to pick this information up from our register what we'll pick up all the liabilities and then the payroll expense will be just the sum of them so we're going to start here in k 15 we're going to say negative instead of equal so we can flip the sign and then go to the register and we want to pick up the oast i and enter and then we want to go to the 220 fika for the medicare so we're in k 16 negative and then go to the earnings records and we want to pick up this 697 12 and enter then we're in k 17 for the futa we're going to say negative and then go back over to the register and pick up the futa and enter then we're in k 18 we're going to say negative this is su ta and go back over and pick up the su ta and enter so there's our information if we sum that up flip the sign that's what the debit's going to be 4266 17 that's going to go here in j 14 i'm going to do that with our plug formula negative su m double click the sum i'm going to move this over now and then we're going to highlight this information and enter so there's our payroll taxes journal entry so let's record this now so here's the uh 512 so we're going to go find 512 i'm going to see if we can make this we're going to find 512 in the general ledger so uh of course it's it's dim way down here it's going to be in the same order on the gl so we're going to go to the right we're looking for 512 order assets liability equity income and expenses scrolling all the way over and we see uh 502 and we're looking for payroll taxes and here's the payroll tax expense it's 520 not 512 520 so here it is in bq 7 we're going to do this now this one's as of uh 10 1 and we're in br 7 which will equal and we'll pick up this 4266 enter bringing the balance up so if we put our cursor right to the left of the frozen screen and scroll right then we should see that same balance here then we're going to record on 215 so here's 215 account 215 that's a liability account here it is so it's our third liability should be the same order on the gl assets liabilities we're looking for account 215 here it is this is on 10 1 in at 10 we're going to see the employee portion right above it on the same date now the employer portion equals this 298081 bringing the balance to 5961 if we go right to the right or the left of the frozen screen and then go right then we see our balance down here for uh uh FICA for the 215 account and now we're going to go to the 220 account that's going to be right underneath 220 same order on the gl if we go to the right we're looking for account 220 so 220 220 220 so here it is for medicare so 220 we're going to be in aw 10 as of 10 1 now we're in ax 10 equals and we're going to scroll down just a bit and pick up that 697 and enter that'll bring the balance up so again we have the matching here two accounts one in the prior journal entry the employee and now in the employer portion that'll bring the balance up to 1394 if we go back to the left side of the frozen screen and click rights then we should see that same amount here now the employer only taxes futa and suta 222 23 is here 223 same order on the gl we're looking for 223 so we're looking for 223 here's 220 here's 223 so we are in BA 8 it's going to be on 10 1 date and then on BB 8 we're going to say equals and scroll down to that futa in K7 and enter so that's going to bring the balance up to 42 62 if we go right to the left side of the frozen screen and scroll right then there's the 42 here now we're going to go to suta on 224 here's 224 I'm going to scroll to the right and look for accounts 224 scroll up just a bit looking for 224 it's going to be down just a bit so we're going to be down here in BA 22 10 1 date BB 22 so we're going to say this equals and go over to the suta and that'll bring the balance up to that 545 62 if we go right to the left of the frozen screens and scroll right then we should see that amount here as well on the trial balance that should put us back in balance here note the two accounts affecting the net income are from the first journal entry the wages payable the second the payroll taxes and all these other things that we withheld on the first journal entry are are not directly involved they're not payroll tax expenses to us only the employer portion are recorded as payroll tax expenses to us as the company on the on the financials okay next journal entry we're going to say 15 more days of pass we're going to pretend 15 days have passed and we've taken this information from the employees and recorded our portion of the employer taxes for payroll now we need to pay it so just like we would with accounts payable it went up now it's going to go down we're going to pay it we're going to pay it with what cash so cash is going to go down and we're going to record all these other liabilities now I'm going to record cash last here because it's going to be a credit to cash decreasing cash and it'll be just basically the sum of all these accounts we will make here now note just to just as a note in practice in real life we might you know get this information and record it from summary from a from an outside payroll provider that does our payroll for us and we could do it in one journal entry there but also we'll have a if we were doing it in practice we could have a separate paycheck for each individual employee or in this case we might have to have a separate deposit for the federal taxes and the state taxes possibly and so note that it could be broken out a little bit differently in multiple checks to pay off the the the payments however in essence it'll be the same type of thing we're doing this with journal entries if we were to write a check in the system we would have to write you know at least one check for the uh fight gun social security and possibly separate checks for futa and suta but we're going to do the journal entry it'll be the same type of journal entry the payable goes up and then we pay it off okay so here's all the liabilities we need to pay off we need to pay off uh o asti hi futa and suta and the federal income tax so we're just going to pay all these amounts there and just take it out of cash we're going to leave the group insurance the union dues in the retirement right now and just accumulate those upwards as liabilities that we owe to the employees we owe the 401k uh payments in some way shape or form the union dues we're going to pay to the union we're not going to record the payment but obviously we would have to pay that's the union we're just going to let them accumulate uh the retirement plan this is the insurance we would have to pay the insurance in some way shape or form retirement plan is going to have to be repaid in some way shape or form we're not going to get into the details there we're going to pay the payroll tax so we're going to right click here we're going to put that in cell h20 right click and paste 123 then we'll pull the amounts and we're just going to these are all credits so we're going to do the opposite and debit them to make them go down now note you might be tempted to do a journal entry here and say equals the cell we can't do that because it'll make a circle reference when we post it so because when we post it this number will change and then we posted it using this number and that doesn't that's a circle reference we can't take this number in order to make this number and then change this number based on this number that we use to make this number so just that's why we're not using a formula you could try that just to see what a circle reference is once we post it it'll be a problem so okay and we're just going to type these in there 5961.61 and then the next one for FICA 1394.25 and then FUTA 42.62 and then SUTA is going to be 545.62 and federal income tax 8404.13 and then we will sum these up we will need a credit then which of course will go to cash so I'm going to copy the cash right click on E-A-E and AF5 and copy and we'll put that on the bottom here for cash in H25 right click and paste 123 and the amount is going to be if we sum this up it's 1634823 I'm going to use our plug formula negative SUM double click the sum function and highlight this information and enter so there we have it so now let's post this out so here's 215 we're going to record this one first so 215 up top I'm going to scroll to the right it's going to be the same order on the general ledger here's 210 here's 210 here's 215 so we are in so AS 11 this is going to be 1015 now when we're actually making the payment and we're just going to say equals and scroll down to the 5961 make sure you're picking up the correct journal entry because clearly we have a few now and it might help too if you're if we get mixed up to highlight the journal entry we are on sometimes I do this right click and make it green just so the colors actually help I used to think colors we're not you know not accounting like but they're really helpful so we're just going to pick up the green numbers now so now we're going to say 220 so here's 220 here's 220 so we're going to scroll to the right and find 220 and so we're looking for 220 and so here we got it and it's going to be in cell aw 11 10 15 then in cell a x 11 we'll say equals scroll down just a bit and we'll point to this 1394 and enter so it goes down to zero if we go right to the right of the frozen pains we can see that these are going down to zero now zero and zero now futa so here's futa 223 scrolling to the right looking for 223 there's 224 we want 223 it's going to be as of 1015 in cell bb 9 equals scroll down we're looking for the green area 42 enter so that brings it down to zero if we go right to the left of the frozen pains and scroll right we can see it goes to zero on the trial balance then we're looking for suta 224 so we'll scroll to the right to find suta so 223 225 so here we are on 1015 and bb 23 equals and we're looking for this 555 enter and that brings us back down to zero does typically what you would think an in a payable account just like accounts payable it goes up and then it goes down you know we owe money and then we pay money okay and then we're going to go to the fit so i'm going to go to the right of the frozen pain one more time fit 225 let's look for 225 so here's 224 here's 225 we're on 1015 tab in bf 9 we're going to say equals and point to that 8404 13 bringing us back down to zero same effect on the payable account and then if we scroll to the right or if we go to the left of the frozen pains and scroll right once we'll see it goes down to zero on the trial balance as well and then we got uh we should be in balance by this point oh we didn't record the checking now we're going to court the cash the cash going out so here's the cash that's our first account so if we scroll to the right we're going to be on ak 10 1015 on al not nine nine not 10 equals and we'll pick up this 16348 so there we have cash going down to 510607 if we scroll to the left of the frozen pains and scroll right we should have that same amount here and there is our journal entry so now we've recorded the employee portion the employer portion and we're you know the salary expenses and the withholdings and then the employer portion of taxes and then now then we paid it 15 days later last thing i'm going to do is just make this um back to our normal blue so i'm going to highlight this right click and we can go here and then we can make it our normal blue here which is also on the wheel if we go to this wheel the standard it's right there or you can format paint it so if you want to format paint it just make sure you're picking up the whole row don't pick up one cell and try to paint the color because you're going to paint the format too so we want to make sure we pick up this whole row go to the home tab paint brush and then pick up these full rows it should paint brush the color and you know the same formatting for the respective columns