Question

Exercise 10.11 ACCOUNTING FOR THE PAYROLL Giovanni SpA pays its employees on a monthly basis. The payroll is processed on the 6th day of the month and payable on the 7th day of the month. Gross salaries for July were €500 000, from which €125000 was deducted in tax. All of Giovanni SpA's salaries are accounted for as expenses. Deductions for health insurance were €10 000. Payments for health insurance and employee withheld income taxes are due on the 15th day of the following month. Required 1. Prepare all journal entries to record the July payroll, the payment of July salaries and the remittance of deductions. 2. Calculate the balance of the Accrued Payroll account at the end of July,

Answer 1

1)

Date	Account title	Debit	credit
31 July	Salaries and wage expense	500000
	Income tax payable		125000
	Health insurance payable		10000
	salaries and wage payable		365000
	[To record july payroll]
7 August	salaries and wage payable	365000
	cash		365000
	[To remit July salaries]
15 August	Income tax payable	125000
	Health insurance payable	10000
	Cash		135000
	[To remit insurance and taxes to appropriate authorities]

b)Accrued payroll at end of July = 365000