Paradise Hills Berry Farm has 26 employees who are paid biweekly. The payroll register showed the following payroll deductions for the pay period ending March 23, 2021. Gross Pay EI Premium Income Taxes CPP Medical Ins. United Way72,950.00 1,210.97 10,061.00 3,437.78 1,325.00 1,494.00Required:Prepare a journal entry to record the employer’s share of payroll deductions. (Round the final answers to 2 decimal places.)
Question
Paradise Hills Berry Farm has 26 employees who are paid biweekly. The payroll register showed the following payroll deductions for the pay period ending March 23, 2021. Gross Pay EI Premium Income Taxes CPP Medical Ins. United Way72,950.00 1,210.97 10,061.00 3,437.78 1,325.00 1,494.00Required:Prepare a journal entry to record the employer’s share of payroll deductions. (Round the final answers to 2 decimal places.)
Solution
The employer's share of payroll deductions typically includes matching contributions for CPP (Canada Pension Plan) and EI (Employment Insurance). The amounts for these are not given in the question, so I'll assume that the employer matches the amounts deducted from the employees' pay.
Here's how you would record the journal entry:
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Debit (increase) Salaries and Wages Expense for the gross pay: $72,950.00
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Credit (decrease) Cash for the net pay, which is the gross pay minus all deductions: 1,210.97 (EI Premium) - 3,437.78 (CPP) - 1,494.00 (United Way) = $56,420.25
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Debit (increase) EI Expense for the employer's share of EI: $1,210.97
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Debit (increase) CPP Expense for the employer's share of CPP: $3,437.78
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Credit (decrease) EI Payable for the total EI (employee and employer portions): 2,421.94
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Credit (decrease) CPP Payable for the total CPP (employee and employer portions): 6,875.56
The journal entry would look like this:
- Salaries and Wages Expense: $72,950.00 (Dr)
- EI Expense: $1,210.97 (Dr)
- CPP Expense: $3,437.78 (Dr)
- Cash: $56,420.25 (Cr)
- EI Payable: $2,421.94 (Cr)
- CPP Payable: $6,875.56 (Cr)
Please note that this is a simplified example and actual payroll accounting can be more complex, depending on the specific circumstances.
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