5A. Appendix: Payroll Deductions and Liabilities
Payroll Deductions and Liabilities
Jacqueline Gagnon
The CRA will expect to collect the money a company owes for payroll. We will assume that Companies A, B, and C remit payroll deductions monthly. Each company will look at its current liabilities, find EI payable, CPP payable, and employee income tax withheld at the end of the month. And they will transfer cash to the CRA for the total of all these accounts. Let’s go back to our examples:
- My Turn:
- EmployerA has a biweekly payroll schedule. At the end of the month, current liability balances relating to payroll deductions were as follows:
-
EI payable 880 CPP payable 2,678 Employee income tax payable 4,950 - Required:
- Prepare the journal entry to record EmployerA’s CRA remittance.
| DR | EI Payabale | 880 | ||
| DR | CPP Payable | 2,678 | ||
| DR | Employee Income Tax Payable | 4,950 | ||
| CR | Cash | 8,508 |
Alright. Now look at remitting payroll deductions for CompanyB. You’ve got this!
Your Turn:5A—5: Company B
Solution:5A—5: Solution
And the last one – CompanyC.
Your Turn:5A—6: Company C
Solution:5A—6: Solution
Fantastic! That’s the basics of salaries, wages, and payroll deductions. Hope you’ve had an excellent time. I know I have! See you in the next chapter for the Statement of Changes in Equity 😊