Supplemental Instruction Handouts
Financial Accounting
Appendix A:
Payroll Liabilities
Answer Key
1. Calculate the employees’ EI and CPP withholdings, the net pay for each employee, and
prepare a journal entry to record the payroll. Assume all employees work in the office.
EI = Gross Pay x 1.83%
G. Downie = $720 x 1.83% =
L. Hubbard = $610 x 1.83% =
G. Lucas = $830 x 1.83% =
C. Wood = $1,700 x 1.83% =
Total EI
$13.18
$11.16
$15.19
$31.11
$70.64
$3500
CPP = (Gross Pay - 𝑁𝑁𝑁𝑁𝑁𝑁 𝑜𝑜 ) x 4.95%
𝑝𝑝𝑝 𝑝𝑝𝑝𝑝𝑝𝑝𝑝
$3,500/52 = $67.31
G. Downie = ($720 - $67.31) x 4.95% = $652.69 x 4.95% =
L. Hubbard = ($610 - $67.31) x 4.95% = $542.69 x 4.95% =
G. Lucas = ($830 - $67.31) x 4.95% = $762.69 x 4.95% =
C. Wood = ($1,700 - $67.31) x 4.95% = $1,632.69 x 4.95% =
Total CPP
G. Downie = $720 - $144 - $24 - $13.18 - $32.31 =
L. Hubbard = $610 - $91 - $24 - $11.16 - $26.86 =
G. Lucas = $830 - $142 - $36 - $15.19 - $37.75 =
C. Wood = $1,700 - $395 - $24 - $31.11 - $80.82 =
Total Net Pay
Date
May 20
General Journal
Account Titles and Explanations
Office Salaries Expense
Income Tax Payable
Health Insurance Payable
EI Payable
CPP Payable
Salaries Payable
$32.31
$26.86
$37.75
$80.82
$177.74
$506.51
$456.98
$599.06
$1,169.07
$2,731.62
PR
Debit
3,860
Page ____
Credit
772
108
70.64
177.74
2,731.62
Academic Success Centre
www.rrc.mb.ca/asc
These answers were created by Michael Reimer for the Academic Success Centre.
2. A) Prepare the journal entry to record the January 14 payroll.
Date
Jan 14
General Journal
Account Titles and Explanations
Sales Salaries Expense
Office Salaries Expense
EI Payable
CPP Payable
Income Tax Payable
Hospital Insurance Payable
Union Dues Payable
Salaries Payable
PR
Debit
19,750
6,230
Page ____
Credit
450
1,286
5,310
930
420
17,584
2. B) Prepare a journal entry to record the employer’s payroll expenses resulting from the
January 14 payroll.
Employers EI = Employees EI x 1.4 = $450 x 1.4 = $630
Employers CPP = Employees CPP x 1 = $1,286 x 1 = $1,286
Date
Jan 14
General Journal
Account Titles and Explanations
EI Expense
CPP Expense
EI Payable
CPP Payable
PR
Debit
630
1,286
Page ____
Credit
630
1,286
2. C) Prepare the journal entry the employer would make to pay the payroll deductions to the
government on January 28.
EI Payable = Employees EI Payable + Employers EI Payable = $450 + $630 = $1,080
CPP Payable = Employees CPP Payable + Employers CPP Payable = $1,286 + $1,286 = $2,572
Date
Jan 28
General Journal
Account Titles and Explanations
EI Payable
CPP Payable
Income Tax Payable
Cash
PR
Debit
1,080
2,572
5,310
Page ____
Credit
Academic Success Centre
www.rrc.mb.ca/asc
These answers were created by Michael Reimer for the Academic Success Centre.
8,962