A payroll accrual journal entry records wages earned by employees but not yet paid at the end of an accounting period. It's used when the pay period doesn't align with the end of your accounting period — which happens regularly for businesses with weekly or biweekly payroll.
When do you need a payroll accrual?
If your fiscal month ends on the 31st but your biweekly payroll covers the 25th through the 7th of the next month, you've incurred 6 days of wages in the current period that won't be paid until the next period. The accrual records those 6 days' worth of wages as an expense in the correct period.
How to calculate the accrual amount
Formula: Accrual = Total Payroll × (Days in Period Before Fiscal End ÷ Total Days in Pay Period)
Example: $10,000 biweekly payroll, pay period is Dec 26 – Jan 8, fiscal year ends Dec 31. Days before Dec 31: 5 (Dec 26–30). Total days in pay period: 14.
Accrual = $10,000 × (5 ÷ 14) = $3,571.43
The payroll accrual journal entry
| Account | Debit | Credit |
|---|---|---|
| Wages Expense | $3,571.43 | |
| Accrued Wages Payable | $3,571.43 |
Reversing the accrual
On the first day of the new period (January 1 in this example), post a reversing entry:
| Account | Debit | Credit |
|---|---|---|
| Accrued Wages Payable | $3,571.43 | |
| Wages Expense | $3,571.43 |
This clears the liability and lets the full payroll journal entry post normally when payroll is actually run in January.
Calculate payroll accruals instantly
Use the free PostBooks payroll accrual calculator to calculate the accrual amount and generate the journal entry from your pay period dates and payroll total.