CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 14-1 Recording A Payroll.

CENTURY 21 ACCOUNTING © Thomson/South-Western

LESSON 14-1LESSON 14-1

Recording A Payroll


2

LESSON 14-1

PAYROLL REGISTERPAYROLL REGISTER page 340

Journalizing the Payroll for Employees

Use the Payroll Register and transferring the information to the Cash Payments Journal

Payroll

Salary Expense

Employees Medicare

Tax PayableEmployees

SS Tax Payable

Health Insurance Payable

“Others Payable”

CashEmployees Fed Inc Tax

Payable


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LESSON 14-1

ANALYZING PAYMENT OF A PAYROLLANALYZING PAYMENT OF A PAYROLL page 341


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LESSON 14-1

6. Write the titles of accounts credited.

JOURNALIZING PAYMENT OF A JOURNALIZING PAYMENT OF A PAYROLLPAYROLL

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page 342

December 15. Paid cash for payroll, $4,609.46. Check No. 335.

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1. Write the date.

2. Write the title of the account debited.

3. Write the check number.

4. Write the account debited. 7. Write the amounts credited.

5. Write the total amount paid to employees.



1. What account title is used to journalize the Total Earning column?A. Salary Expense

2. What account title is used to journalize the Federal Income Tax column?A. Employee Income Tax Payable



Recording Employer Payroll Taxes



Employers must pay four separate payroll taxes

Employer SS Tax (6.2% (.062) - $87,000 Tax Base)Employer Medicare Tax (1.45% (.0145) - No Tax Base)Federal Unemployment Tax (0.8% (.008)- $7,000 Tax Base)State Unemployment Tax (5.4% (.054) - $7,000 Tax Base)


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LESSON 14-2

UNEMPLOYMENT TAXABLE EARNINGSUNEMPLOYMENT TAXABLE EARNINGS

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33

page 374

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

2. Enter unemployment taxable earnings.

3. Total the Unemployment Taxable Earnings column.


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LESSON 14-2

FederalUnemployment

Tax=

FederalUnemployment

Tax Rate×

UnemploymentTaxableEarnings

StateUnemployment

Tax=

StateUnemployment

Tax Rate×

UnemploymentTaxableEarnings

UNEMPLOYMENT TAXESUNEMPLOYMENT TAXES page 375

$6.32=0.8%×$790.00

$42.66=5.4%×$790.00


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LESSON 14-2

JOURNALIZING EMPLOYER JOURNALIZING EMPLOYER PAYROLL TAXESPAYROLL TAXES page 376

December 15. Recorded employer payroll taxes expense, $485.92, for the semimonthly pay period ended December 15. Taxes owed are: social security tax, $354.11; Medicare tax, $82.83; federal unemployment tax, $6.32; state employment tax, $42.66. Memorandum No. 63.

(continued on next slide)


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LESSON 14-2

JOURNALIZING EMPLOYER JOURNALIZING EMPLOYER PAYROLL TAXESPAYROLL TAXES

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page 376

4. Write the debit amount.1. Write the date.

5. Write the titles of the liability accounts credited.

2. Write the title of the expense account debited.

6. Write the credit amounts.3. Write the memorandum number.

(continued from previous slide)


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LESSON 14-2

TERMS REVIEWTERMS REVIEW

federal unemployment tax state unemployment tax

page 377



Reporting Withholding And Payroll Taxes



IRS Form W-2 Wage and Tax Statement Issued to each employee by January of the next

calendar year. Required of employers who withholds income tax, SS

tax and MD tax from employees. Four copies (A to D) are given to each employee.

Copies B & C go employee. Employee attaches B to federal income tax return and keeps C for personal records.

Employer send copy A to Social Security Administration and keeps D for the business’ records


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LESSON 14-3

EMPLOYER ANNUAL REPORT TO EMPLOYER ANNUAL REPORT TO EMPLOYEES OF TAXES WITHHELDEMPLOYEES OF TAXES WITHHELD page 349



Each employer is required by law to periodically report the following:Payroll taxes withheld from employee salariesEmployer payroll taxes due the government

Employers must file a quarterly federal tax return showing the federal income tax, SS tax and MD tax due to the government.

IRS Form 941


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LESSON 14-3

EMPLOYER’S QUARTERLY FEDERAL EMPLOYER’S QUARTERLY FEDERAL TAX RETURNTAX RETURN page 350(continued on next slide)

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22

1. Heading 2. Number of employees


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LESSON 14-3

EMPLOYER’S QUARTERLY FEDERAL EMPLOYER’S QUARTERLY FEDERAL TAX RETURNTAX RETURN page 350(continued on next slide)

3. Total quarterly earnings

4. Income tax withheld

5. Employee and employer social security and Medicare taxes 7. Total taxes

6. Social security plus Medicare taxes

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55

33

66

77


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LESSON 14-3

EMPLOYER’S QUARTERLY FEDERAL EMPLOYER’S QUARTERLY FEDERAL TAX RETURNTAX RETURN page 350(continued from previous slide)

88 88 8899

8. Total taxes for each month 9. Total taxes



IRS Form W-3 Transmittal of Wage and Tax StatementsIs submitted to the Social Security Administration by February 28 each yearW-3 reports the previous year’s earning and payroll taxes withheld for all employees.Attached to Form 2-3 is Copy A of each employee Form W-2.For business’ with more 250 employees they must submit the information electronicallyAt the end of the calendar year, employers must also report to the federal and state governments a summary of all earnings paid to employees during the twelve months


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LESSON 14-3

EMPLOYER ANNUAL REPORTING OF EMPLOYER ANNUAL REPORTING OF PAYROLL TAXESPAYROLL TAXES page 352


14-4 Paying Withholding and 14-4 Paying Withholding and Payroll TaxesPayroll Taxes

Employers must pay to the federal, state and local governments to following:

All payroll taxes withheld from employeesEmployer Payroll taxesThis payment is referred to as a DEPOSIT

Two amounts determine how often deposits are made to the federal government

Amount of payroll taxes collected during the current deposit periodAmount of payroll taxes owed during a prior 12-month periodThe 12-month period that ends on June 30th of the prior year is called the LOOKBACK PERIOD.


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LESSON 14-4

PAYING THE LIABILITY FOR EMPLOYEE INCOME TAX, PAYING THE LIABILITY FOR EMPLOYEE INCOME TAX, SOCIAL SECURITY TAX, AND MEDICARE TAXSOCIAL SECURITY TAX, AND MEDICARE TAX page 383


FORM 8109 Federal Deposit FORM 8109 Federal Deposit CouponCoupon

New employers are monthly schedule depositors for the first calendar year of businessIRS Form 8109 coupon book issued by IRS for monthly depositType of tax – federal income, social security and medicare is identified by marking the 941 circleDeposits can also be made using the EFTPS (Electronic Federal Tax Payment System).Businesses having deposits of more than $200K during the last calendar year must use EFTPS


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LESSON 13-1

FORM 8109, FORM 8109, FEDERAL DEPOSIT COUPONFEDERAL DEPOSIT COUPON page 355


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LESSON 14-4

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

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44

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page 356

January 15. Paid cash for liability for employee income tax, $757.00; social security tax, $1,451.38; and Medicare tax, $339.42; total, $2,547.80. Check No. 347.

1. Write the date.

2. Write the titles of the three accounts debited.


4. Write the debit amounts.

5. Write the amount of the credit.


Paying the Liability for Federal Paying the Liability for Federal Unemployment InsuranceUnemployment Insurance

Federal Unemployment Insurance is paid by the end of the month following each quarter if the liability amount is more $100.Use IRS form 8109 selecting 940 for the type of taxIndicate which quarter is being paid.


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LESSON 14-3

PAYING THE LIABILITY FOR PAYING THE LIABILITY FOR FEDERAL UNEMPLOYMENT TAXFEDERAL UNEMPLOYMENT TAX page 355


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LESSON 14-4

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

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page 358

January 31. Paid cash for federal unemployment tax liability for quarter ended December 31, $34.60. Check No. 367.

1. Write the date.

5. Write the amount of the credit to Cash.

4. Write the debit amount.


2. Write the title of the account debited.


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LESSON 14-.4

JOURNALIZING PAYMENT OF LIABILITY JOURNALIZING PAYMENT OF LIABILITY FOR STATE UNEMPLOYMENT TAXFOR STATE UNEMPLOYMENT TAX page 358

January 31. Paid cash for state unemployment tax liability for quarter ended December 31, $233.55. Check No. 368.

1. Date

5. Credit amount

4. Debit amount

3. Check number

2. Account debited

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AUDIT 14-3 and 14-4AUDIT 14-3 and 14-4

When most employer furnish a W-2 statement to their employees? Jan 31st

What taxes are included in the quarterly federal tax return filed by the employer? Federal Tax, SS, and Medicare

For monthly schedule depositor, when are payroll taxes paid to the federal government. The 15th of the following month

What are two different uses for Form 8109? For paying payroll taxes and pay federal unemployment

taxes

CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 14-1 Recording A Payroll.

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