5A. Appendix: Payroll Deductions and Liabilities
Payroll Deductions and Liabilities
Jacqueline Gagnon
Did you know employers have to contribute to EI and CPP as well? That’s right. Employers pay 1.4 times employees’ EI contributions. Employers exactly match employees’ CPP contributions. These amounts owing by the employer will be added to EI and CPP payable and will be remitted regularly to the CRA. Let’s try preparing journal entries for employer contributions to EI and CPP. The following examples are continued from the last section:
- My Turn:
- EmployerA has a biweekly payroll schedule. At the end of the current period, gross salaries and wages were $10,000, and employee deductions for EI, CPP, and income tax were $163, $595, and $2,200 respectively.
- Required:
- Prepare the journal entry to record EmployerA’s portion of EI and CPP payable to the CRA.
| Employee Amount | Employer Match Rate | Employer Amount | |
|---|---|---|---|
| Employer EI Payable: | $ 163 | × 1.4 | = $ 228 |
| Employer CPP Payable: | $ 595 | × 1 | = $ 595 |
| DR | EI Expense | 228 | ||
| CR | EI Payable | 228 |
| DR | CPP Expense | 595 | ||
| CR | CPP Payable | 595 |
Your Turn:5A—3: Employer B
Solution:5A—3: Solution
And lastly, take a look at employer payroll contributions for EmployerC.
Your Turn:5A—4: Employer C
Solution:5A—4: Solution
Great work!! Now the very last step – paying the CRA.