When a company’s salaried employees work and are owed money, the company must debit salaries expense and credit salaries payable. However, the journal entry is a bit more complicated than this. That’s because companies are required (in most countries) to withhold money from employees’ salaries to cover the employees’ income taxes, social security taxes, and/or union dues. In addition, the company might incur payroll taxes of its own; in the U.S., for example, companies must pay half of their employees’ social security taxes and also pay federal unemployment tax.
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