Payroll at month-end
Objective: Accrue payroll and employer taxes at period end.
Recommended first: Paying payroll liabilities, Accruals: unpaid expenses and unbilled revenue
When a pay period spans month-end, accrue the wages earned through the last day of the month, plus the employer's related taxes. Employee withholdings are recognized when the payroll is actually processed.
If payday falls after month-end, the days already worked belong to the earlier month. Accrue those wages and the employer's related taxes so the month's labor cost is complete. Optional reversing entries on the first day of the next month simplify recording the actual payroll.
Work out the accrual from the payroll calendar: identify the last payday, count the working days from then through month-end, and multiply by the daily wage cost before applying the stated employer tax rate.
Check your work
- Are days worked through month-end included?
- Are employer taxes accrued too?
- Is the accrual reversed or settled correctly next month?
Unpaid gross $1,500; fictional 8% employer tax $120.
| Account | Debit | Credit |
|---|---|---|
| Wages Expense | $1,500.00 | |
| Payroll Tax Expense | $120.00 | |
| Wages Payable | $1,500.00 | |
| Payroll Taxes Payable | $120.00 |
Common mistakes
✗ Forgetting employer taxes on accrued wages.
✓ Accrue both.
Guided practice
Use hints freely here.
Item 1 of 1
Accrue month-end payroll and employer tax
At Mar 31, 2026, Corner Bean Café owes employees $1,900.00 of unpaid gross wages and owes employer payroll taxes at this exercise's fictional 8% rate. Record one adjusting entry for both.
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Independent practice
Try these without hints. Completing the lesson needs at least one independent item solved without revealing the answer.
Item 1 of 4
Accrue unpaid wages
Corner Bean Café pays wages of $140.00 per working day every Friday. March 31 falls on a Tuesday, so 4 working days have been earned but not paid. Record the adjustment.
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References and provenance
- OpenStax, Principles of Accounting, Volume 1: Financial Accounting (accessed 2026-10-29)
Original lesson written for Bookkeeping Exercises (AI-assisted drafting). Calculations are verified by the platform's automated accounting tests. Not yet reviewed by a credentialed accountant. Updated 2026-10-29.