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Describe the first 2 entries to be posted in the payroll cycle.

Describe the first 2 entries to be posted in the payroll cycle.

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Answer #1

Explanation
Payroll cycle is used by the organisation which are either small in nature or do not use automated accounting system.

Payroll cycle records the salaries and wages transaction for the organisation.

The first two entries for payroll cycle will be as follows

1. The first journal entry will be posted for recording gross wages including all the taxes payable and payroll payable

Journal entry 1.
Gross wages account debit XX
To wages payable. XX
To federal /state tax payable. XX

2. The second journal entry will be made by the organisation when the net amount will be paid to the employees.

Journal entry 2.
Wages payable account debit XX
To cash /bank account credit XX

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