EI & CPP Payble & Expense

Question

Okay, so I am a new learner to Simply accounting and was taught to input payroll deductions in GJ in the following steps: 
 (1) debit to 5410 Gross wage (2)credit to 2190 Tax ded (3) credit to 2185 CPP ded (4) credit to 2180 EI ded (5) credit to 1060 Net pay (6) debit to 5430 CPP employer portion (7) credit to 2185 CPP employee portion (8) debit to 5420 EI Employer Portion (9) credit to 2180 EI Employee portion 
 My accountant to me this was wrong way to do it and that EI and CPP were showing as not being paid out. I want to do it the right way. My question is: What are the correct steps? Any reponse would be really really appreciated! Thanks so much.

FormerMember · Accepted Answer

Hi there: Your journal entry would look like this: 
 5410 Wages Expense (debit) 
 5430 CPP Expense (debit) 
 5420 EI Expense (debit) 
 2180 EI Payable (credit) 
 2185 CPP Payable (credit) 
 2190 Employee Taxes Payable (credit) 
 1060 Bank (for the paycheque) (credit) 
 What this journal entry has done is to record the wages expense, the CPP and EI expense, the amounts "Payable" for EI, CPP and Tax, and the amount of the payroll cheque paid out of the bank to the employee. So far that is a perfectly proper way to record all this information. Your EI, CPP and Tax are showing as payable and when you prepare a cheque to pay this amount to the Receiver General each month, then you will record the payment at that time by crediting the Bank for the total and debiting each of the payable accounts (EI, CPP and Tax) for the individual amounts that make up the total amount paid. 
 Not sure what the Accountant thinks you are doing wrong unless there is more information that you need to give in order for us on the Forum to understand properly how you are doing the payroll and recording it etc. Normally the payroll is recorded through the Payroll Module and all the entries take care of themselves and you are able to generate a T4 at year end. Perhaps the Accountant meant that you should be making your entries through the Payroll Module and not the General Journal? If this information doesn't help, come back with more explanation of your situation. Rita Deering

Sage 50 Canada

EI & CPP Payble & Expense

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