Page 104 - Accountancy_F5

Journal entries
The journal entries dealt with in payroll accounting are those made in the books of the
employer. Primarily, such entries include debits for the salaries expense, and the entity’s
portion of payroll taxes. There are also credit entries to liability for payroll taxes that
have not been paid, as well as for the amount of cash already paid to employees for their
net pay and salary advances. The statutory contributions like deductions for pension
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contributions and health insurance are also credited, debiting the salary expenses account.
The basic entries are as follows:
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Journal entries
Dr Cr
S/N PARTICULARS
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TZS TZS
Salary expenses account xx xx
(PAYE) Income tax payable account xx
NSSF/PSSF payable account xx
NHIF Payable A/C xx
Salary Advance Payable A/C
(Being recognition of employees’ salaries)

Salary expenses A/c xx
NSSF/PSSF payable account xx
(Being contribution made by employer to NSSF/
PSSF)

(PAYE) Income tax payable account xx
NSSF/PSSF payable account xx
NHIF Payable A/C xx
Salary Advance Payable A/C xx
Salary payable A/C xx
Bank xx
(Being Payments made)

Statement of Profit or Loss
Salary expenses A/C xx
(Being Transfer salary expense to establishment of
Profit or loss)

Example 3.8
Using details given in example 3.7 (Msilanga Company), prepare the necessary
journal entries, in the books of Msilanga Company.

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