To prepare the payroll journal entry for Trax Ltd.
on March 31, follow these steps:
Step 1: Calculate Total Salaries Expense
Each employee earns $3,000 per month, and there are six employees:
3,000×6=18,0003,000 \times 6 = 18,000
Total Gross Pay = $18,000
Step 2: Calculate Deductions
Income Tax (20%):
18,000×0.20=3,60018,000 \times 0.20 = 3,600
Canada Pension Plan (CPP) (Assume 5.95% for 2024):
18,000×0.0595=1,07118,000 \times 0.0595 = 1,071
Employment Insurance (EI) (Assume 1.66% for 2024):
18,000×0.0166=29918,000 \times 0.0166 = 299
Step 3: Calculate Net Pay (Amount Paid to Employees)
18,000−(3,600+1,071+299)=13,03018,000 - (3,600 + 1,071 + 299) = 13,030
Step 4: Prepare the Payroll Journal Entry
Account Debit ($) Credit
($)
Salaries Expense 18,000
CPP Payable 1,071
EI Payable 299
Income Tax Payable 3,600
Salaries Payable (Net 13,030
Pay)
Total 18,000 18,000
Step 5: Verify that Total Debits = Total Credits
Total Debits: $18,000 (Salaries Expense)
Total Credits: $18,000 (Sum of Liabilities + Salaries Payable)
To record the payment of wages to employees for March, we need to recognize the previously
recorded liability (Salaries Payable) as an actual cash payment.
Step 1: Identify the Liability Being Paid
From QS AI-2, we recorded Salaries Payable of $13,030 (net pay to employees after
deductions).
Step 2: Journal Entry for Paying Employees
When paying employees, the entry will be:
Account Debit ($) Credit
($)
Salaries 13,030
Payable
Cash (Bank) 13,030
Total 13,030 13,030
Step 3: Verify
Salaries Payable is debited to remove the liability.
Cash (Bank) is credited because money is being paid out.
Total Debits = Total Credits ✅
This entry records the actual disbursement of payroll to employees. Let me know if you need
additional details!
To record the remittance to the Canada Revenue Agency (CRA) for the payroll deductions, we
need to consider the employer’s portion of CPP and EI along with the amounts already
deducted from employees.
Step 1: Identify Amounts Owed to CRA
From QS AI-2, the company deducted the following from employees:
CPP Payable = $1,071
EI Payable = $299
Income Tax Payable = $3,600
Employer's Additional Contributions:
Employer's CPP Contribution = $1,071 (Matches employee’s portion)
Employer's EI Contribution = $418.60 (1.4 times the employee’s portion: $299 × 1.4)
Total Remittance to CRA:
3,600+1,071+299+1,071+418.60=6,459.60
Step 2: Journal Entry for CRA Remittance
Account Debit ($) Credit
($)
CPP Payable 1,071
EI Payable 299
Income Tax Payable 3,600
Employer CPP Expense 1,071
Employer EI Expense 418.60
Cash (Bank) 6,459.60
Total 6,459.60 6,459.60
Step 3: Explanation
Debits: Clear liabilities for employee deductions (CPP, EI, Income Tax) and record
employer contributions as expenses.
Credit to Cash: Reflects the payment made to CRA.
Total Debits = Total Credits ✅
This journal entry correctly records the actual remittance to CRA, ensuring compliance with
payroll regulations. Let me know if you need modifications! 🚀
Payroll Journal Entry Based on the Payroll Register
To record the payroll expenses, deductions, and liabilities from QS AI-4, we will prepare the
journal entry.
Step 1: Identify the Totals
From the table:
Gross Pay: $2,405.00
EI Premium (Employee Contribution): $38.01
Income Tax Deducted: $583.65
CPP Deducted (Employee Contribution): $120.08
Total Deductions: $741.74
Net Pay to Employees (Gross Pay - Total Deductions):
2,405.00 − 741.74 = 1,663.26
Step 2: Employer Contributions (Expenses for income T2/T1)
Employer must match CPP and pay 1.4x EI:
Employer CPP Contribution: $120.08
Employer EI Contribution (1.4 × 38.01): $53.21
Total Employer Payroll Expense:
120.08 + 53.21 = 173.29
Step 3: Payroll Journal Entry
(a) Record Payroll Expense and Deductions:
Account Debit ($) Credit
($)
Salaries Expense 2,405.00
CPP Payable 120.08
EI Payable 38.01
Income Tax Payable 583.65
Salaries Payable (Net 1,663.26
Pay)
Total 2,405.00 2,405.00
(b) Record Employer Contributions for CPP & EI:
Account Debit ($) Credit
($)
Employer CPP Expense 120.08
Employer EI Expense 53.21
CPP Payable 120.08
EI Payable 53.21
Total 173.29 173.29
(c) Record Payment of Net Pay to Employees:
Account Debit ($) Credit
($)
Salaries 1,663.26
Payable
Cash (Bank) 1,663.26
Total 1,663.26 1,663.26
(d) Remittance to CRA (Taxes, CPP, EI):
Account Debit ($) Credit ($)
CPP Payable 120.08
EI Payable 91.22
Income Tax Payable 583.65
Cash (Bank) 794.95
Total 794.95 794.95
Step 4: Verify Balances
All debits and credits balance, ensuring accurate payroll accounting. Let me know if you need
further refinements! 🚀
