Chapter 14: Chapter 14: Employees, Payroll, and Employees, Payroll, and Account ReconciliationAccount Reconciliation

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Employees, Payroll, and Employees, Payroll, and Account ReconciliationAccount Reconciliation

Employees and employers are required to pay local, Employees and employers are required to pay local, state, and federal payroll taxes. Employers must state, and federal payroll taxes. Employers must withhold taxes from each employee’s paycheck. The withhold taxes from each employee’s paycheck. The amount withheld for federal taxes is determined from amount withheld for federal taxes is determined from tax tables published by the IRS.tax tables published by the IRS.The amount withheld depends on the employee’s The amount withheld depends on the employee’s earnings and the number of exemptions or withholding earnings and the number of exemptions or withholding allowances claimed by the employee. FICA taxes and allowances claimed by the employee. FICA taxes and Medicare taxes are also deducted from employee’s Medicare taxes are also deducted from employee’s paychecks.paychecks.It is the purpose of Chapter 14 to show you how to use It is the purpose of Chapter 14 to show you how to use Peachtree to enter payroll default information, add Peachtree to enter payroll default information, add employees, make journal entries for payroll, print employees, make journal entries for payroll, print payroll reports, and complete account reconciliation.payroll reports, and complete account reconciliation.

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Software Objectives, p. 515Software Objectives, p. 515

Explore the Payroll Setup Wizard.Explore the Payroll Setup Wizard.Enter initial payroll fields.Enter initial payroll fields.Enter employee and employer default information.Enter employee and employer default information.Journalize and post payroll journal entries.Journalize and post payroll journal entries.Print paychecks.Print paychecks.Print the financial statementsPrint the financial statementsReconcile Highland Bank Account and the Payroll Checking Reconcile Highland Bank Account and the Payroll Checking Account.Account.Compare the vendor ledgers, customer ledgers, and inventory Compare the vendor ledgers, customer ledgers, and inventory valuation report to the associated general ledger accounts.valuation report to the associated general ledger accounts.Make four backups: two for Nancy’s Sales & Service; two for the Make four backups: two for Nancy’s Sales & Service; two for the end-of-chapter exercises.end-of-chapter exercises.

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Web Objectives, p. 515Web Objectives, p. 515Use your Internet browser to go to the book’s Use your Internet browser to go to the book’s website at website at www.mhhe.com/yacht2007www.mhhe.com/yacht2007. .

Go to the Internet Activity link on the book’s Go to the Internet Activity link on the book’s website. Then, select WEB EXERCISES website. Then, select WEB EXERCISES PART 3. Complete the fourth web exercise in PART 3. Complete the fourth web exercise in Part 3–Salary Wizard. Part 3–Salary Wizard.

Use a word processing program to write a Use a word processing program to write a summary of the websites that you visited.summary of the websites that you visited.

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Peachtree TipsPeachtree Tips

The exercises in Part 3 are cumulative. Chapters 11, 12 The exercises in Part 3 are cumulative. Chapters 11, 12 and 13 must be completed before starting Chapter 14. and 13 must be completed before starting Chapter 14.

The Payroll Entry window is the Payroll Journal.The Payroll Entry window is the Payroll Journal. The payroll tax withholdings calculated automatically The payroll tax withholdings calculated automatically

when students select the Payroll Entry task are for when students select the Payroll Entry task are for example purposes only. They do not reflect exact example purposes only. They do not reflect exact withholding amounts. For an additional fee, Peachtree withholding amounts. For an additional fee, Peachtree Software has a payroll tax update service. Software has a payroll tax update service.

To learn more about Peachtree Software’s payroll tax To learn more about Peachtree Software’s payroll tax service, visit their website at service, visit their website at www.peachtree.com/taxtablewww.peachtree.com/taxtable..

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Peachtree Tips (concluded)Peachtree Tips (concluded)

Follow these steps to check the global tax table version:Follow these steps to check the global tax table version:

1.1. Start Peachtree. Open any company.Start Peachtree. Open any company.2.2. From the menu bar, click on Help; About Peachtree Accounting. The Installed Tax From the menu bar, click on Help; About Peachtree Accounting. The Installed Tax

Service shows 19000101. The About Peachtree Accounting window is shown on page Service shows 19000101. The About Peachtree Accounting window is shown on page 520.520.

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Backing Up Chapter 14Backing Up Chapter 14

Backup Name Backup Name

KBKB Page Nos.Page Nos.

Chapter 14 BeginChapter 14 Begin 705 KB705 KB 531-532531-532

Chapter 14Chapter 14 729 KB729 KB 551551

Exercise 14-1Exercise 14-1 634 KB634 KB 558558

Exercise 14-2Exercise 14-2 656 KB656 KB 561561

.

This information is also shown on page 376.

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Chapter 14 TopicsChapter 14 Topics1.1. Software & web objectives, p. 515Software & web objectives, p. 5152.2. Getting started, pp. 518-519Getting started, pp. 518-519

a. Checking your global tax table version, pp. 519-520a. Checking your global tax table version, pp. 519-520b.b. Establishing the payroll account, p. 521Establishing the payroll account, p. 521

3.3. Initial payroll fields, pp. 521-524Initial payroll fields, pp. 521-5244.4. Entering Employee and Employer Default Information, pp. 524-529Entering Employee and Employer Default Information, pp. 524-5295.5. Entering employee maintenance information, Entering employee maintenance information,

pp. 529-531pp. 529-5316.6. Backing up your data, pp. 531-532Backing up your data, pp. 531-5327.7. Payroll entry, pp. 532-538Payroll entry, pp. 532-5388.8. Printing the payroll journal, pp. 538-539Printing the payroll journal, pp. 538-5399.9. Account reconciliation, p. 540Account reconciliation, p. 540

a.a. Highland Bank Statement, p. 541Highland Bank Statement, p. 541b.b. Payroll Checking Account bank statement, p. 542.Payroll Checking Account bank statement, p. 542.c.c. Print reports, pp. 542-546Print reports, pp. 542-546

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Chapter 14 Topics (concluded)Chapter 14 Topics (concluded)

10.10. Printing the general ledger trial balance, p. 547Printing the general ledger trial balance, p. 54711.11. Printing the financial statements, pp. 548-550Printing the financial statements, pp. 548-55012.12. Backing up Chapter 14 data, p. 551Backing up Chapter 14 data, p. 55113.13. Internet activity, p. 551Internet activity, p. 55114.14. Summary and review, p. 552Summary and review, p. 552

a. Going to the net, pp. 552-553a. Going to the net, pp. 552-553b. Multiple-choice questions, pp. 553-555b. Multiple-choice questions, pp. 553-555c. Exercise 14-1, pp. 556-558c. Exercise 14-1, pp. 556-558d. Exercise 14-2, pp. 559-561d. Exercise 14-2, pp. 559-561e. Chapter 14 index, p. 562e. Chapter 14 index, p. 562

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Getting started, pp. 518-519Getting started, pp. 518-519

Complete steps 1 – 2g. on pages 518-519.Complete steps 1 – 2g. on pages 518-519.

Remember, you must complete Chapters 11, 12, and 13 Remember, you must complete Chapters 11, 12, and 13 before starting Chapter 14.before starting Chapter 14.

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Checking Your Global Tax Table Version, p. 520Checking Your Global Tax Table Version, p. 520

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Establishing the payroll account, p. 521Establishing the payroll account, p. 521

In order to establish the payroll checking account, In order to establish the payroll checking account, transfer funds from Highland Bank (Account No. 10200) transfer funds from Highland Bank (Account No. 10200) to the Payroll Checking Account (Account No. 10300). to the Payroll Checking Account (Account No. 10300). Read the transaction information on p. 521.Read the transaction information on p. 521.

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Initial Payroll Fields, p. 521-524Initial Payroll Fields, p. 521-524From the Employees & Payroll page, click . Then, select From the Employees & Payroll page, click . Then, select Set Up Employee Defaults. This window is shown on p. 522.Set Up Employee Defaults. This window is shown on p. 522.

Read step 3, p. 522. Accept the default accounts by clicking Read step 3, p. 522. Accept the default accounts by clicking <Next>.<Next>.

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Payroll Setup Wizard, concluded, pp. 523-524Payroll Setup Wizard, concluded, pp. 523-524

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Entering employee and employer Entering employee and employer default information, pp. 524-529default information, pp. 524-529

Read the information on p. 524. From the Employees & Payroll page, click on and Read the information on p. 524. From the Employees & Payroll page, click on and select Set Up Employee Defaults.select Set Up Employee Defaults.Select the Assign Payroll Fields for W-2s arrow. This is step 1 on p. 524. The Assign Payroll Select the Assign Payroll Fields for W-2s arrow. This is step 1 on p. 524. The Assign Payroll Fields for W-2s window is shown on p. 525 below step 2.Fields for W-2s window is shown on p. 525 below step 2.

Click <OK>.Click <OK>.

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Assign Payroll Fields for EmployEE Assign Payroll Fields for EmployEE Paid Taxes, p. 525Paid Taxes, p. 525

Click on the arrow next to EmployEE Paid Taxes. Click on the arrow next to EmployEE Paid Taxes. This window is shown on p. 525 below step 4.This window is shown on p. 525 below step 4.

Click <OK>. Click <OK>.

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Assign Payroll Fields for EmployER Paid Assign Payroll Fields for EmployER Paid Taxes, p. 526Taxes, p. 526

Click on the arrow next to EmployER Paid Taxes. Click on the Click on the arrow next to EmployER Paid Taxes. Click on the down-arrow in the State Disability (SDI) field. Select SDI. This down-arrow in the State Disability (SDI) field. Select SDI. This window is shown on p. 526 below step 7.window is shown on p. 526 below step 7.

Click on <OK> to return to the Employee Defaults window. Click on <OK> to return to the Employee Defaults window. Then, select the Pay Then, select the Pay LLevels tab.evels tab.

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Employee Defaults, p. 526Employee Defaults, p. 526Make sure you have selected the Pay Make sure you have selected the Pay LLevels tab on the evels tab on the Employee Defaults window. Then for Overtime, select Employee Defaults window. Then for Overtime, select Account No. 77600, Overtime Expense. The Employee Account No. 77600, Overtime Expense. The Employee Defaults, Pay Defaults, Pay LLevels window is shown on p. 526 below evels window is shown on p. 526 below step 9.step 9.

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EmployEEmployEEE Defaults (continued) p. 527 Defaults (continued) p. 527Complete steps 10–17 on p. 527. This Complete steps 10–17 on p. 527. This window is shown below step 17, p. 527.window is shown below step 17, p. 527.

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EmployEEmployERR Fields tab, pp. 528-529 Fields tab, pp. 528-529

Complete step 18 on p. 528. This window is shown Complete step 18 on p. 528. This window is shown below step 18 on p. 528.below step 18 on p. 528.

On p. 529, complete step 19 by clicking on <OK> to On p. 529, complete step 19 by clicking on <OK> to save your changes.save your changes.

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Entering employee maintenance Entering employee maintenance information, pp. 529information, pp. 529

From the Employees & Payroll page, click .From the Employees & Payroll page, click .Select New Employee. The Maintain Employees/Sales Reps Select New Employee. The Maintain Employees/Sales Reps window appears.window appears.Complete the employee information shown on step 2, p. 529. Complete the employee information shown on step 2, p. 529.

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Entering Employees Maintenance Information, p. 529Entering Employees Maintenance Information, p. 529

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Maintain Employees/Sales Reps, pp. 530-531 Maintain Employees/Sales Reps, pp. 530-531

After completing step 6 on page 530, this window shows Pay IAfter completing step 6 on page 530, this window shows Pay Innfo. fo.

Complete steps 7 – 12 on p. 531.Complete steps 7 – 12 on p. 531.

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Backing up your data, p. 531-532Backing up your data, p. 531-532

Complete steps 1 – 6 on pp. 531-532 to Complete steps 1 – 6 on pp. 531-532 to back up your data.back up your data.

Use Use Chapter 14 BeginChapter 14 Begin as the back up as the back up name.name.

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Payroll Entry, pp. 532-538Payroll Entry, pp. 532-538

Read the information on pages 532-534Read the information on pages 532-534Complete steps 1 – 9 on pages 533-534 to issue a payroll check. The Complete steps 1 – 9 on pages 533-534 to issue a payroll check. The Payroll Entry window is shown on p. 534.Payroll Entry window is shown on p. 534.

Click on the Print icon.Click on the Print icon.

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Print Forms: Payroll Checks, pp. 535-536Print Forms: Payroll Checks, pp. 535-536

Complete step 11 on p. 535. Select OCR Multi-Purpose PR Laser. Complete step 11 on p. 535. Select OCR Multi-Purpose PR Laser. Read the comment on page 535. The Preview Forms: Payroll Read the comment on page 535. The Preview Forms: Payroll Checks window is shown on p. 535 below step 11.Checks window is shown on p. 535 below step 11.

Click <OK>. Complete steps 12 and 13 on pages 535-536.Click <OK>. Complete steps 12 and 13 on pages 535-536.

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First Check Number, pp. 536-537First Check Number, pp. 536-537Type Type 101101 as the First Check Number. The Print Forms: as the First Check Number. The Print Forms: Payroll Checks window is shown on p. 536 below step 14.Payroll Checks window is shown on p. 536 below step 14.

Click on <Print>. Compare your check with the one shown on page Click on <Print>. Compare your check with the one shown on page 536. Complete step 15, p. 236; and step 17, p. 537. Then, issue the 536. Complete step 15, p. 236; and step 17, p. 537. Then, issue the checks shown in step 18.checks shown in step 18.

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Printing the payroll journal, pp. 538-539Printing the payroll journal, pp. 538-539

Complete steps 1 and 2 on pp. 538 & 539.Complete steps 1 and 2 on pp. 538 & 539.

Compare your payroll journal to the one Compare your payroll journal to the one shown on pp. 538-539.shown on pp. 538-539.

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Account Reconciliation, pp. 540-542Account Reconciliation, pp. 540-542

Read page 540. Peachtree’s Read page 540. Peachtree’s general ledger is integrated general ledger is integrated with other parts of the with other parts of the program.program.The Highland Bank Statement The Highland Bank Statement is on p. 541is on p. 541Payroll Checking Account Payroll Checking Account Bank Statement is on p. 542Bank Statement is on p. 542Printing Reports: Account Printing Reports: Account Reconciliation, General Reconciliation, General Ledgers, Customer Ledgers, Ledgers, Customer Ledgers, Vendor Ledgers, and Inventory Vendor Ledgers, and Inventory reports are on pp. 542-546 reports are on pp. 542-546

General Ledger

Account No. 10200Highland Bank(Cash account)

Account No. 20000Accounts Payable

(Current Liability)

JJH06Jane Jarvis Hardware

(Vendor Ledger)

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Printing the general ledger trial Printing the general ledger trial balance, p. 547 balance, p. 547

Complete steps 1 and 2 on p. 547.Complete steps 1 and 2 on p. 547.

Compare your general ledger trial balance Compare your general ledger trial balance to the one shown on p. 547.to the one shown on p. 547.

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Printing the financial statements, Printing the financial statements, pp. 548-550pp. 548-550

Complete steps 1-3 on pp. 548-550.Complete steps 1-3 on pp. 548-550.

Compare your financial statements with Compare your financial statements with the ones shown on pages 548, 549, and the ones shown on pages 548, 549, and 550.550.

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Backing Up Chapter 14 Data, p. 551Backing Up Chapter 14 Data, p. 551

Complete steps 1-6 on page 551.Complete steps 1-6 on page 551.The back up name is The back up name is Chapter 14Chapter 14..

Click on <Click on <OOk>. Compare your check to the one shown on p. 381. Record the additional payments k>. Compare your check to the one shown on p. 381. Record the additional payments shown on p. 382. shown on p. 382.

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Glossary of TermsGlossary of TermsChapter 14Chapter 14

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Exemptions, p. 516Exemptions, p. 516

These are withholding allowances These are withholding allowances claimed by the employee. The number of claimed by the employee. The number of exemptions or withholding allowances exemptions or withholding allowances usually includes one for the employee, usually includes one for the employee, one for the employee’s spouse, and one one for the employee’s spouse, and one for each dependent.for each dependent.

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Withholding allowances, p. 516Withholding allowances, p. 516

Exemptions claimed by the employee. Exemptions claimed by the employee. The number of exemptions or The number of exemptions or withholding allowances usually includes withholding allowances usually includes one for the employee, one for the one for the employee, one for the employee’s spouse, and one for each employee’s spouse, and one for each dependent.dependent.

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FICA taxes, p. 516FICA taxes, p. 516

This deduction from wages is also called This deduction from wages is also called the social security tax and provides the social security tax and provides qualified workers who retire at age 62 or qualified workers who retire at age 62 or older with monthly payments from the older with monthly payments from the federal government. A portion of this tax is federal government. A portion of this tax is for Medicare.for Medicare.

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Medicare, p. 516Medicare, p. 516

A portion of FICA taxes (also called social A portion of FICA taxes (also called social security taxes) deducted from wages of security taxes) deducted from wages of qualified workers. Medical benefits called qualified workers. Medical benefits called Medicare are received by retirees after Medicare are received by retirees after reaching age 65.reaching age 65.

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W-2 forms, p. 516W-2 forms, p. 516

An annual report of an employee’s wages An annual report of an employee’s wages subject to FICA and federal income tax subject to FICA and federal income tax that shows the amounts of these taxes that shows the amounts of these taxes that were withheld.that were withheld.

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Internet Activity, p. 551Internet Activity, p. 55111 Go to the book’s website at Go to the book’s website at www.mhhe.com/yacht2007www.mhhe.com/yacht2007. .

22 Link to Student Edition. Link to Student Edition.

33 In the Course-wide Content list, link to Part 3 Internet Activities In the Course-wide Content list, link to Part 3 Internet Activities for Chapters 11-14. Open or Save. (You can also choose for Chapters 11-14. Open or Save. (You can also choose Chapter 14, then link to Internet Activities. If you Choose a Chapter 14, then link to Internet Activities. If you Choose a Chapter, observe that other chapter-specific links are available; Chapter, observe that other chapter-specific links are available; for example, Quizzes, PowerPoints, and Going to the Net for example, Quizzes, PowerPoints, and Going to the Net Exercises.)Exercises.)

44 Complete the SALARY WIZARD-Chapter 14 exercise. Read Complete the SALARY WIZARD-Chapter 14 exercise. Read steps 1-5. steps 1-5.

55 Follow the steps shown on the book’s website to complete this Follow the steps shown on the book’s website to complete this Internet activity.Internet activity.

66 Using a word processing program, write a brief summary of what Using a word processing program, write a brief summary of what you find. Include all appropriate website addresses.you find. Include all appropriate website addresses.

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Going to the Net, pp. 552-553Going to the Net, pp. 552-553

Access the Employer Reporting and Instructions Access the Employer Reporting and Instructions website at website at http://www.ssa.gov/employer/http://www.ssa.gov/employer/. Link to . Link to General W-2 Filing Information, then answer these General W-2 Filing Information, then answer these questions.questions.

1.1. What are dates that employers must send W-2 What are dates that employers must send W-2 information to the Social Security Administration? information to the Social Security Administration? (Include the dates for (Include the dates for bothboth electronic and paper electronic and paper filing.)filing.)

2.2. When must employers give employees their W-2? When must employers give employees their W-2? 3.3. What two forms do employers send to the Social What two forms do employers send to the Social

Security Administration?Security Administration?