Accounting IAccounting IChapter 14 – Payroll Accounting, Taxes, &

Reports

PAYROLL REGISTERPAYROLL REGISTER

Lesson 14-1, page 332Lesson 14-1, page 332

ANALYZING PAYMENT OF PAYROLLANALYZING PAYMENT OF PAYROLL

Lesson 14-1, page 333Lesson 14-1, page 333

JOURNALIZING PAYMENT OF A PAYROLLJOURNALIZING PAYMENT OF A PAYROLL

December 15. Paid cash for semimonthly payroll, $2989.02 (total payroll, $3,803.75, less deductions: employee income tax, $273.00; social security tax, $247.26; Medicare tax, $57.07; health insurance premiums, $182.40; U.S. Savings Bonds, $35.00; United Way donations, $20.00). Check No. 312.

Accounts Affected

Salary Expense

Employee Income Tax Payable

Social Security Tax Payable

Medicare Tax Payable

Health Insurance Premiums Payable

U.S. Savings Bond Payable

United Way Donations Payable

Cash

Entered

Debit side

Credit side

Credit side

Credit side

Credit side

Credit side

Credit side

Credit side

Change

Increased

Increased

Increased

Increased

Increased

Increased

Increased

Decreased

Lesson 14-1, page 334Lesson 14-1, page 334

Classification

Expense

Liability

Liability

Liability

Liability

Liability

Liability

Asset

JOURNALIZING PAYMENT OF A PAYROLLJOURNALIZING PAYMENT OF A PAYROLL

Lesson 14-1, page 334Lesson 14-1, page 334

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3. Write the check number.

1. Write the date.

4. Write the amount debited to Salary Expense.

2. Write the title of the account debited.

5. Write the amount credited to Cash.

6. Write the titles of the accounts credited.

7. Write the credit amounts.

4

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Page 335Page 335

TTERMS REVIEWERMS REVIEWfederal unemployment tax

state unemployment tax

Lesson 14-2, page 340Lesson 14-2, page 340

TTERMS REVIEWERMS REVIEW

Federal Unemployment TaxFederal Unemployment Tax

A federal tax used for state & federal administrative expenses of the unemployment program.

Lesson 14-2, page 338Lesson 14-2, page 338

TTERMS REVIEWERMS REVIEW

State Unemployment TaxState Unemployment Tax

A state tax used to pay benefits to unemployed workers.

Lesson 14-2, page 338Lesson 14-2, page 338

1. Enter accumulated earnings and total earnings for each employee.

UNEMPLOYMENT TAXABLE EARNINGSUNEMPLOYMENT TAXABLE EARNINGS

Lesson 14-2, page 337Lesson 14-2, page 337

1

3

12

3. Total the unemployment taxable earnings column.

2. Enter unemployment taxable earnings.

UNEMPLOYMENT TAXESUNEMPLOYMENT TAXES

Unemployment Federal FederalTaxable Unemployment UnemploymentEarnings × Tax Rate = Tax

$183.75 × 0.8% = $1.47

Lesson 14-2, page 338Lesson 14-2, page 338

Unemployment State StateTaxable Unemployment UnemploymentEarnings × Tax Rate = Tax

$183.75 × 5.4% = $9.92

Calculate Unemployment Taxes—State++ ++ −− −− ÷÷ ÷÷ ××××

Calculate Unemployment Taxes—Federal++ ++ −− −− ÷÷ ÷÷ ××××

Unemployment Tax Payable—Federal

Medicare Tax Payable

Unemployment Tax Payable—State

Social Security Tax PayablePayroll Taxes Expense

JOURNALIZING EMPLOYER PAYROLL TAXESJOURNALIZING EMPLOYER PAYROLL TAXESDecember 15. Recorded employer payroll taxes expense, $315.72, for the semimonthly pay period ended Dec. 15. Taxes owed are: social security tax, $247.26; Medicare tax, $57.07; federal unemployment tax, $1.47; state unemployment tax, $9.92. Memorandum No. 63.

Accounts Affected

Payroll Taxes Expense

Soc. Security Tax Pay.

Medicare Tax Payable

Unemp. Tax Pay.—Fed.

Unemp. Tax Pay.—State

Entered

Debit side

Credit side

Credit side

Credit side

Credit side

Change

Increased

Increased

Increased

Increased

Increased

Lesson 14-2, page 339Lesson 14-2, page 339

Classification

Expense

Liability

Liability

Liability

Liability

normal balance

57.07

normal balance

247.26

normal balance

315.72

normal balance

9.92

normal balance

1.47

JOURNALIZING EMPLOYER PAYROLL TAXESJOURNALIZING EMPLOYER PAYROLL TAXES

Lesson 14-2, page 339Lesson 14-2, page 339

5

13 4

2

3. Write the memorandum number.

1. Write the date.

4. Write the debit amount.

2. Write the expense account debited.

5. Write the titles of the liability accounts credited.

6. Write the credit amounts.

6

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Page 340Page 340

EMPLOYER ANNUAL REPORT TO EMPLOYEES OF EMPLOYER ANNUAL REPORT TO EMPLOYEES OF TAXES WITHHELDTAXES WITHHELD

Lesson 14-3, page 341Lesson 14-3, page 341

EMPLOYER’S QUARTERLY FEDERAL TAX RETURNEMPLOYER’S QUARTERLY FEDERAL TAX RETURN

Lesson 14-3, page 342Lesson 14-3, page 342

5

1

4

2

3. Total Quarterly Earnings

1. Heading

4. Income Tax Withheld

2. Number of Employees

5. Employee and Employer Social Security and Medicare Taxes

6. Social Security plus Medicare Taxes

7. Total Taxes

8. Total Taxes for Each Month

9. Total Taxes

6

9

7

8

3

3

PREPARING EMPLOYER’S QUARTERLY FEDERAL PREPARING EMPLOYER’S QUARTERLY FEDERAL TAX RETURNTAX RETURN

Lesson 14-3, page 343Lesson 14-3, page 343

Total Earnings × Tax Rate = Tax

Social Security $22,575.00 × 13% = $2,934.75Medicare $22,575.00 3% = $ 677.25

Employee EmployerSocial Social

Federal Income Security and Security and Federal TaxTax Withheld + Medicare Tax + Medicare Tax = Liability

Calculate Social Security and Medicare Taxes++ ++ −− −− ÷÷ ÷÷ ××××

Calculate Social Security and Medicare Taxes++ ++ −− −− ÷÷ ÷÷ ××××

Dec. 1-15 $273.00 + $304.33 + $304.33 = 881.66Dec. 16-31 $269.00 + 302.08 + $302.08 = $873.16Totals $542.00 + 606.41 + 606.41 = $1,754.82

EMPLOYER ANNUAL REPORTING OF PAYROLL EMPLOYER ANNUAL REPORTING OF PAYROLL TAXESTAXES

Lesson 14-3, page 344Lesson 14-3, page 344

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Page 345Page 345

FORM 8109, FEDERAL DEPOSIT COUPONFORM 8109, FEDERAL DEPOSIT COUPON

Lesson 14-4, page 347Lesson 14-4, page 347

1,754.82

Cash

Medicare Tax PayableSocial Security Tax Payable Employee Inc. Tax Payable

JOURNALIZING PAYMENT OF LIABILITY FOR JOURNALIZING PAYMENT OF LIABILITY FOR EMPLOYEE INCOME TAX, SOCIAL SECURITY TAX, EMPLOYEE INCOME TAX, SOCIAL SECURITY TAX, AND MEDICARE TAXAND MEDICARE TAX

January 15. Paid cash for liability for employee income tax, $542.00; social security tax, $985.40; and Medicare tax, $227.42; total, $1,754.82. Check No. 330.

Accounts Affected

Employee Inc. Tax Pay.

Social Security Tax Pay.

Medicare Tax Payable

Cash

Entered

Debit side

Debit side

Debit side

Credit side

Change

Decreased

Decreased

Decreased

Decreased

Lesson 14-4 page 348Lesson 14-4 page 348

Classification

Liability

Liability

Liability

Asset

normal balance

normal balance

985.40

normal balance

542.00

normal balance

227.42

JOURNALIZING PAYMENT OF LIABILITY FOR JOURNALIZING PAYMENT OF LIABILITY FOR EMPLOYEE INCOME TAX, SOCIAL SECURITY TAX, EMPLOYEE INCOME TAX, SOCIAL SECURITY TAX, AND MEDICARE TAXAND MEDICARE TAX

Lesson 14-4, page 348Lesson 14-4, page 348

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3. Write the check number.

1. Write the date.

4. Write the three debit amounts.

2. Write the title of the three accounts debited.

5. Write the amount of the credit to Cash.

PAYING THE LIABILITY FOR FEDERAL PAYING THE LIABILITY FOR FEDERAL UNEMPLOYMENT TAXUNEMPLOYMENT TAX

Lesson 14-4, page 349Lesson 14-4, page 349

CashUnemployment Tax Payable—Federal

JOURNALIZING PAYMENT OF LIABILITY FOR JOURNALIZING PAYMENT OF LIABILITY FOR FEDERAL UNEMPLOYMENT TAXFEDERAL UNEMPLOYMENT TAX

January 31. Paid cash for federal unemployment tax liability for quarter ended December 31, $8.40. Check No. 343.

Accounts Affected

Unemployment Tax Payable—Federal

Cash

Entered

Debit side

Credit side

Change

Decreased

Decreased

Lesson 14-4, page 350Lesson 14-4, page 350

Classification

Liability

Asset

normal balance

8.40normal balance

8.40

JOURNALIZING PAYMENT OF LIABILITY FOR JOURNALIZING PAYMENT OF LIABILITY FOR FEDERAL UNEMPLOYMENT TAXFEDERAL UNEMPLOYMENT TAX

Lesson 14-4, page 350Lesson 14-4, page 350

51 3 42

3. Write the check number.

1. Write the date.

4. Write the debit amount.

2. Write the title of the account debited.

5. Write the amount of the credit to Cash.

JOURNALIZING PAYMENT OF LIABILITY FOR STATE JOURNALIZING PAYMENT OF LIABILITY FOR STATE UNEMPLOYMENT TAXUNEMPLOYMENT TAX

Lesson 14-4, page 350Lesson 14-4, page 350

3. Write the check number.

1. Write the date.

4. Write the debit amount.

2. Write the title of the account debited.

5. Write the amount of the credit to Cash.

51 3 42

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Page 351Page 351