# Recording payroll in the books

> JE-11 posts $8,400 of wages against $1,692.60 withheld and $6,707.40 paid; AJE-4 adds $642.60 of employer FICA; the October deposit clears the liability.

Source: https://lopifi.com/learn/recording-payroll-journal-entries
Part of: Lopifi — US GAAP books on autopilot, checked by a CPA (https://lopifi.com)

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**How do you record payroll in the books?** JE-11 posts $8,400 of wages against $1,692.60 withheld and $6,707.40 paid; AJE-4 adds $642.60 of employer FICA; the October deposit clears the liability.

A payroll posts as two entries, both read off the register. On payday, gross wages are the expense, split between what reached the employees and what was withheld for the government. At month end, the employer's own taxes are an expense of the same wages. Between them, [payroll liabilities](https://lopifi.com/md/glossary/payroll-liabilities) holds everything owed until it's deposited.

*[Journal entries: JE-11, AJE-4]*

JE-11 and AJE-4: September's payroll, as the book posts it.

*[Interactive figure: double entry]*

JE-11: September payroll of $8,400 gross is paid, less the tax withheld from it. Each line drops into its own pan — debits left, credits right — and the beam only levels, and the entry only posts, when the two sides are equal.

| JE-11 line | Register column | Amount |
| --- | --- | --- |
| Dr 6000 Payroll expense | Gross | 8,400 |
| Cr 2100 Payroll liabilities | Federal income tax + Social Security + Medicare withheld | 1,692.60 |
| Cr 1000 Cash — operating | Net pay | 6,707.40 |

Where each figure in JE-11 comes from.

After AJE-4, 2100 carries $2,335.20 at September 30 — exactly the federal deposit due on October 15, 2026. That's the tie-out at every close: the liability equals the register's undeposited tax, and nothing older is in it. The October deposit clears it, and the FUTA accrual the lesson on employer taxes added stays in 2100 until Form 940 is paid.

*[T-account: 2100]*

Payroll liabilities at September 30.

## When the pay period crosses the month end

Northwind pays the whole month on the 25th, so September's wages are all in September. A company that pays every two weeks has a pay period straddling most month ends. The days already worked are the closing month's expense and an [accrued liability](https://lopifi.com/md/glossary/accrued-liability), even though payday is next month — accrued at the close and reversed on the first, before the payroll posts.

**Scenario — A biweekly payroll at month end.** A biweekly payroll covers Monday the 23rd to Friday the 3rd. At the month end, six of its ten workdays are in the closing month. Six-tenths of the period's gross — and of the employer's taxes on it — is accrued: debit payroll expense and payroll tax expense, credit accrued wages and payroll liabilities. The worked entry for accrued wages shows the proration.

**Wrong:** Dr Payroll expense 6,707.40 / Cr Cash 6,707.40 — the bank debit, as one line.

**Right:** Dr Payroll expense 8,400 / Cr Payroll liabilities 1,692.60 / Cr Cash 6,707.40.

The expense is what the staff earned. What reached their banks is only part of it.

**Post from the register, clear from the bank**
- Pro: Gross, withholding and employer tax each land where they belong
- Pro: 2100 proves itself against the deposits every month
- Con: The provider's debits have to be matched to the entries — net pay one day, taxes another
- Best for: Any company with a payroll register to post from

**Expense each bank debit as it clears**
- Pro: Quick from a bank feed
- Con: Wages understated by the withholding, employer taxes buried or missed
- Con: No liability, so a missed deposit is invisible
- Best for: No one

Two ways to code the provider's bank debits.

**Exercise — Post the payroll.** Post September's payroll from the register above. JE-11, on payday: the gross wages, what was withheld, and what reached the bank. AJE-4, at month end: Northwind's own matching Social Security and Medicare. Every line is checked against the book. Type it in the workbook at https://lopifi.com/playground.

> **Payday: debit gross wages, credit withholding to payroll liabilities and net pay to cash. Month end: debit the employer's taxes, credit payroll liabilities. The deposit clears the liability, and the liability always ties to the register.**

## Where this lesson's rules come from

- [IRS Publication 15 (2026), Circular E — Introduction](https://www.irs.gov/publications/p15) — Withheld payroll taxes are the government's money, held in trust (tax)
- [IRS Pub. 15 (2026), What's New](https://www.irs.gov/pub/irs-pdf/p15.pdf) (PDF) — Social Security and Medicare tax for 2026 (irs)
- [IRS Pub. 15 (2026), §14](https://www.irs.gov/pub/irs-pdf/p15.pdf) (PDF) — FUTA for 2026: 6.0% of the first $7,000, 0.6% after the state credit (irs)

## Read further

- https://lopifi.com/md/journal-entries/payroll
- https://lopifi.com/md/journal-entries/accrued-wages
- https://lopifi.com/md/differences/accrued-expenses-vs-accounts-payable
- https://lopifi.com/md/startups/payroll-journal-entries
- https://lopifi.com/md/tools/journal

- **Track:** [Payroll](https://lopifi.com/md/learn/payroll)
- **Lesson:** Lesson 7 of 8 — 9 min
- **Terms taught:** [Payroll liabilities](https://lopifi.com/md/glossary/payroll-liabilities), [Payroll register](https://lopifi.com/md/glossary/payroll-register), [Accrued liability](https://lopifi.com/md/glossary/accrued-liability), [Gross pay](https://lopifi.com/md/glossary/gross-pay), [Net pay](https://lopifi.com/md/glossary/net-pay)
- **Previous:** [Exempt or non-exempt: overtime and minimum wage, Payroll · Lesson 6](https://lopifi.com/md/learn/exempt-vs-non-exempt-employees)
- **Next:** [Payroll providers, PEOs and paying founders, Payroll · Lesson 8](https://lopifi.com/md/learn/payroll-provider-vs-peo)
- **The course:** https://lopifi.com/md/learn