Double entry primer page 44

Double Entry For Payroll

Payroll items are usually segregated into 3 parts: Employee's Salary, Employer's EPF contribution and Employer's Socso contribution.

For Employee's salary, the journal entry typically looks like this:

DR: Basic salary $50,000
DR: Allowance $20,000
DR: Overtime $10,000
	CR: EPF deduction $5,000
	CR: Socso deduction $1,000
	CR: Loan deduction Staff A $1,000
	CR: Lateness deduction $500
    	CR: Income tax deduction $2,000
	CR: Net salary payable. $70,500

In this file, the treatment is slightly different but the principle is the same. For each item, it is pitted against the Net Salary Payable account. So, the entry in the sheet DATA will look like this:

DR: Basic salary $50,000	
CR: Net Salary Payable $(50,000)
DR: Allowance $20,000		
CR: Net Salary Payable $(20,000)
DR: Overtime $10,000		
CR: Net Salary Payable $(10,000)
DR: Net Salary Payable $5,000	
CR: EPF deduction $(5,000)
DR: Net Salary payable $1,000	
CR: Socso deduction $(1,000)
DR: Net Salary payable $1,000	
CR: Loan deduction-Staff A $(1,000)
DR: Net Salary payable $500	
CR: Lateness deduction $(500)
DR: Net Salary payable $2,000	
CR: Income tax deduction $(2,000)

For Employer's EPF contribution, the journal entry typically looks like this:

DR: EPF Employer (expense account)		
CR: EPF Payable

For Employer's SOCSO contribution, the journal entry typically looks like this:

DR: SOCSO-Employer (Expense account)	
CR: SOCSO Payable

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