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Unemployment Taxes
Unemployment taxes are paid for after the period the liability was incurred. In order to post the expense to the period covered, you need to accrue the liability. Estimate the amount of the liability based upon your labor figures for the month. Make a journal entry to accrue the amount each month. For example, Federal Unemployment Tax Act (FUTA) payments are made quarterly. To accrue the FUTA expense over the quarter, you would make a journal entry each month for the estimated amount of the FUTA and credit it to the accrued liability account and debit the insurance expense account. When you make the FUTA payment, you will post it to the accrued liability account to bring it to zero.