Anchor Co. has accrued payroll expense of $1300 which includes employee withholdings of $400. On payday, Anchor will record the distribution of paychecks with a credit to cash in the amount of $900.
What is accrued payroll?
All wages that are owed to employees but have not yet been paid to them are referred to as accrued payroll. It entails a risk for the employer. Only the accrual basis of accounting uses the accrued payroll concept; the cash basis of accounting does not. Salaries, wages, commissions, bonuses, and payroll taxes make up the majority of accruing payroll.
The compensation owing to hourly workers for the period from the last day of payment to the end of the period, plus any payroll taxes associated with those unpaid wages, often makes up the amount of accrued payroll to report at the end of an accounting period.
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