Lesson Plan 4.2 –Payroll Accounting
Course Title – Accounting I
Session Title – Payroll Accounting
Lesson Purpose – Learn payroll procedures for payroll accounting like
journalizing and posting entries, and reporting taxes
Behavioral Objectives






Journalize and post payment of salaries.
Calculate employer payroll taxes.
Journalize and post employer payroll taxes.
Report taxes using the appropriate form.
Journalize and post tax payments.
Discuss the importance of confidentiality in preparing payroll and
repercussions from payroll tax fraud.
Preparation
OLD TEKS Correlations:
2010 TEKS Correlations:
This lesson, as published, correlates
to the following TEKS. Any
changes/alterations to the activities
may result in the elimination of any or
all of the TEKS listed.
120.42.C
1.b. apply basic accounting concepts
and terminology;
3.g. prepare a Trial Balance;
3.h. complete payroll tax forms;
7.a. follow oral and written
instructions;
7.b. develop time management skills
by setting priorities for completing
work as scheduled;
7.c. make decisions using
appropriate accounting concepts
This lesson, as published, correlates
to the following TEKS. Any
changes/alterations to the activities
may result in the elimination of any or
all of the TEKS listed.
130.166.C
2.b. – discuss the significance of
responsibility in accounting such as
ethical and social responsibility and
careers in accounting;
3.h. - prepare trial balances;
9.f. –record the payroll in a general
journal;
9.g. – complete payroll tax expense
forms;
9.h. – prepare federal, state, and local
payroll tax reports
TAKS Correlation:
READING
Objective 1: The student will demonstrate a basic understanding of culturally
diverse written texts.
WRITING
Lesson 4.2 – Payroll Accounting
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING 1
Objective 5: The student will produce a piece of writing that demonstrates a
command of the conventions of spelling, capitalization, punctuation, grammar,
usage, and sentence structure.
Objective 6: The student will demonstrate the ability to revise and proofread to
improve the clarity and effectiveness of a piece of writing.
MATH
Objective 10: The student will demonstrate an understanding of the
mathematical processes and tools used in problem solving.
Materials, Equipment and Resources:



Textbook
Spreadsheet software
Internet
Teaching Strategies:


Demonstration
Observation
Learner Preparation:
Have students research:
What is the current FICA tax rate, Medicare rate, FUTA and SUTA rates?
Using an online tax calculator, estimate the FIT Tax for a single person, a
married person filing jointly, and head of household for $40,000 taxable income.
Place it in a spreadsheet and create a bar chart to show the difference.
Read internet article about pay cards. Create a presentation summarizing what
you learned about pay cards.
Lesson Content:
Introduce payroll procedures with a beginning emphasis on terminology related
to payroll. Students learn how to calculate hours worked using a time card and
use that calculation to calculate gross pay. The lesson also covers calculating
payroll taxes and adding in other types of deductions. Students complete payroll
registers using all the above skills as well as learn control systems used in
payment of payroll.
Assessment:


Observation
Graded Assignments
Lesson 4.2 – Payroll Accounting
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING 1
Additional Resources:
Textbooks:
Guerrieri, Donald J., Haber, Hoyt, Turner. Glencoe Accounting RealWorld Applications and Connections. Glencoe McGraw-Hill, 2000.
ISBN/ISSN 0-02-815004-X.
Ross, Kenton, Gilbertson, Lehman, and Hanson. Century 21 Accounting
Multicolumn Journal Anniversary Edition, 1st Year Course. SouthWestern Educational and Professional Publishing, 2003.
ISBN/ISSN: 0-538-43524-0
Ross, Kenton, Gilbertson, Lehman, and Hanson. Century 21 General
Journal Accounting Anniversary Edition, 7th Edition. SouthWestern Educational and Professional Publishing, 2003.
ISBN/ISSN: 0-538-43529-1.
Websites:
FIT, FICA and FUTA. Symmetry Software Corp., 2009.
http://www.payroll-taxes.com/PayrollTaxes/00000016.htm.
FICA. 2009. http://www.ucexpress.com/tax/help/glossary/futa.htm.
Business Partners:


Accountant
Payroll Clerk
Lesson 4.2 – Payroll Accounting
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING 1
Activity 4.2.1 – Journalizing and Posting Salary Expense
Course Title – Accounting I
Session Title – Payroll Accounting
Activity Purpose – Demonstrate skill in journalizing and posting the salary
expense for a pay period.
OLD TEKS Correlations:
2010 TEKS Correlations:
This lesson, as published, correlates
to the following TEKS. Any
changes/alterations to the activities
may result in the elimination of any or
all of the TEKS listed.
120.42.C
1.b. - apply information from source
documents;
3.g. - record payroll transactions in
journals;
7.a. - follow oral and written
instructions;
7.b. - develop time management
skills by setting priorities for
completing work as scheduled.
7.c. - make decisions using
appropriate accounting concepts;
7.e. - perform accounting procedures
using manual and automated
methods;
7.g. - demonstrate the use of the
numeric keypad by touch.
This lesson, as published, correlates
to the following TEKS. Any
changes/alterations to the activities
may result in the elimination of any or
all of the TEKS listed.
130.166.C
9.f. – record the payroll in a general
journal;
TAKS Correlation:
MATH
Objective 10: The student will demonstrate an understanding of the
mathematical processes and tools used in problem solving.
Materials, Equipment and Resources:


Textbook
Multimedia presentation software
Teaching Strategies:


Discussion
Observation
Activity Outline:
Activity 4.2.1 – Journalizing and Posting Salary Expense Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING 1
Demonstrate the analysis of Salary Expense payment using a Journalizing
Payroll presentation. Emphasize that Salary Expense = Total Earnings and Cash
= Net Pay.
Demonstrate how to journalize and post the entry for payment to employees for
their work.
Have your students analyze, journalize and post similar transactions.
Assessment:


Observation
Graded Assignment
Quality Feature
Analyzes accurately
Accurately journalizes transaction
Posts transaction accurately
New account balances correct
Completes in a timely manner
Score
Activity 4.2.1 – Journalizing and Posting Salary Expense Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING 1
Quiz on Journalizing and Posting Salary Expense
1. Salary Expense is this amount from the payroll register:
a. Net Pay
b. Total Earnings
c. Cash
d. Total Deductions
2. Cash is this amount from the payroll register:
a. Net Pay
b. Total Earnings
c. Cash
d. Total Deductions
3. Salary Expense is a
a. debit normal balance
b. credit normal balance
c. neither debit nor credit
d. all of the above
4. For payment of salaries, cash is a
a. debit
b. credit
c. neither debit nor credit
d. normal debit balance account
5. Total earnings on a payroll register is $500.00 with FIT Tax $25.00, FICA Tax
$20.00 and Net Pay $455.00.
a. Salary Expense is a debit of $455.00
b. Salary Expense is a credit of $455.00
c. Salary Expense is a debit of $500.00
d. Salary Expense is a credit of $500.00
6. FIT Tax and FICA Tax are both credited to what type of account?
a. debit
b. asset
c. liability
d. capital
7. When FIT Tax and FICA Tax are posted to their accounts, what does it do to
the account?
a. increase
b. decrease
c. closes the account
d. makes no change
8. When posting cash from the payment of salaries, what happens to the cash
account?
a. increase
b. decrease
c. nothing
d. closes the account
9. In journalizing the payment of cash for salaries, how many account(s) are
debited?
a. one
b. two
c. three
d. none
Activity 4.2.1 – Quiz on Journalizing and
Posting Salary Expense
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING 1
KEY - Quiz on Journalizing and Posting Salary Expense
1. Salary Expense is this amount from the payroll register:
a. Net Pay
*b. Total Earnings
c. Cash
e. Total Deductions
2. Cash is this amount from the payroll register:
*a. Net Pay
b. Total Earnings
c. Cash
d. Total Deductions
3. Salary Expense is a
*a. debit normal balance
b. credit normal balance
c. neither debit nor credit
d. all of the above
4. For payment of salaries, cash is a
a. debit
*b. credit
c. neither debit nor credit
d. normal debit balance account
5. Total earnings on a payroll register is $500.00 with FIT Tax $25.00, FICA Tax
$20.00 and Net Pay $455.00.
a. Salary Expense is a debit of $455.00
b. Salary Expense is a credit of $455.00
*c. Salary Expense is a debit of $500.00
d. Salary Expense is a credit of $500.00
6. FIT Tax and FICA Tax are both credited to what type of account?
a. debit
b. asset
*c. liability
d. capital
7. When FIT Tax and FICA Tax are posted to their accounts, what does it do to
the account?
*a. increase
b. decrease
c. closes the account
d. makes no change
8. When posting cash from the payment of salaries, what happens to the cash
account?
a. increase
*b. decrease
c. nothing
d. closes the account
9. In journalizing the payment of cash for salaries, how many account(s) are
debited?
*a. one
b. two
c. three
d. none
Activity 4.2.1 – Quiz on Journalizing and
Posting Salary Expense
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING 1
Activity 4.2.2 – Calculating Employer Payroll Taxes
Course Title – Accounting I
Session Title – Payroll Accounting
Activity Purpose – Demonstrate skill in calculating employer payroll taxes.
OLD TEKS Correlations:
2010 TEKS Correlations:
This lesson, as published, correlates
to the following TEKS. Any
changes/alterations to the activities
may result in the elimination of any or
all of the TEKS listed.
120.42.C
1.b. - apply information from source
documents;
3.d. - compute and complete payroll
tax expense forms;
7.a. - follow oral and written
instructions;
7.b. - develop time management skills
by setting priorities for completing
work as scheduled.
7.c. - make decisions using
appropriate accounting concepts;
7.g. - demonstrate the use of the
numeric keypad by touch.
This lesson, as published, correlates
to the following TEKS. Any
changes/alterations to the activities
may result in the elimination of any or
all of the TEKS listed.
130.166.C
9.g. – complete payroll tax expense
forms;
TAKS Correlation:
MATH
Objective 10: The student will demonstrate an understanding of the
mathematical processes and tools used in problem solving.
Materials, Equipment and Resources:


Textbook
Spreadsheet software
Teaching Strategies:


Demonstration
Observation
Activity 4.2.2 – Calculating Employer Payroll
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING 1
Assessment:


Observation
Graded Assignment
Quality Feature
Accurately calculates payroll Taxes.
80% or better correct answers on the online quiz
Activity 4.2.2 – Calculating Employer Payroll
Score
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING 1
Activity Outline:
Explanation/Description
Total
Earnings
Calculation
Amoun
t
There are three payroll taxes
that are expenses to a
business:
 Employer’s FICA Tax
 Federal Unemployment
Tax
 State Unemployment Tax
1. Employer’s FICA Tax
$22,000.00
2. Federal Unemployment Tax
$22,000.00
3. State Unemployment Tax
$22,000.00
What is the total payroll tax
expense for the problem
above?
1. Employer’s FICA Tax
2. FUTA Tax
Paid only on the first
$25,000.00 of income.
3. SUTA Tax
Paid only on the first
$25,000.00 of income.
Payroll Taxes = Total of above
three taxes.
1. Employer’s FICA Tax
2. FUTA Tax
Paid on first $75,000.00 of
income.
3. SUTA Tax
Paid on first $75,000.00 of
income.
Payroll Taxes= Total of above
three taxes.
Activity 4.2.2 – Calculating Employer Payroll
$22,000.00
$22,000 X current FICA Rate
or
$22,000 X 9.3%
$22,000 X current FUTA rate
or
$22,000 X .8%
$22,000.00 X current SUTA
rate
or
$22,000 X 5.5%
Add all three taxes.
?
?
?
?
$32,500.00
?
$32,500.00
?
$32,500.00
?
$32,500.00
?
$150,000.00
?
$150,000.00
?
$150,000.00
?
$150,000.00
?
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING 1
Activity 4.2.3 – Journalizing and Posting Employer
Payroll Taxes
Course Title – Accounting I
Session Title – Payroll Accounting
Activity Purpose – Demonstrate skill in journalizing and posting employer
payroll taxes.
OLD TEKS Correlations:
2010 TEKS Correlations:
This lesson, as published, correlates
to the following TEKS. Any
changes/alterations to the activities
may result in the elimination of any or
all of the TEKS listed.
120.42.C
1.b. - apply information from source
documents;
3.d. - compute and complete payroll
tax expense forms;
7.a. - follow oral and written
instructions;
7.b. - develop time management
skills by setting priorities for
completing work as scheduled.
7.c. - make decisions using
appropriate accounting concepts;
7.g. - demonstrate the use of the
numeric keypad by touch.
This lesson, as published, correlates
to the following TEKS. Any
changes/alterations to the activities
may result in the elimination of any or
all of the TEKS listed.
130.166.C
9.f. – record the payroll in a general
journal;
9.g. – complete payroll tax expense
forms;
TAKS Correlation:
N/A
Materials, Equipment and Resources:

Textbook
Teaching Strategies:


Demonstration
Observation
Activity 4.2.3 – Journalizing and Posting
Employer Payroll Taxes
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING 1
Activity Outline:
Have your students complete this chart in preparation for journalizing and posting
payroll taxes.
Account Name
Type of Account
Increas
e or
Decrea
se
Debit or
Credit
Payroll Taxes Expense
Employer’s FICA Tax
Payable
Federal Unemployment
Tax Payable
State Unemployment
Tax Payable
Discuss their answers in the table.
Demonstrate a problem journalizing and posting the payroll taxes expense for a
business.
Ask students to journalize and post payroll taxes expense for several problems
on their own.
Assessment:


Observation
Graded Assignment
Quality Feature
Score
Debit at the left margin
Credits all indented
Source document or explanation on the last line of the entry
Amounts accurate (debits = credits)
Writing legible
Completes in a timely manner
Activity 4.2.3 – Journalizing and Posting
Employer Payroll Taxes
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING 1
Activity 4.2.4 – Reporting of Taxes
Course Title – Accounting I
Session Title – Payroll Accounting
Activity Purpose – Demonstrate knowledge in the proper forms to report
taxes.
TEKS Correlations:
2010 TEKS Correlations:
This lesson, as published, correlates
to the following TEKS. Any
changes/alterations to the activities
may result in the elimination of any or
all of the TEKS listed.
120.42.C
1.b. - apply information from source
documents;
3.d. - compute and complete payroll
tax expense forms;
7.a. - follow oral and written
instructions;
7.b. - develop time management
skills by setting priorities for
completing work as scheduled.
7.c. - make decisions using
appropriate accounting concepts;
7.g. - demonstrate the use of the
numeric keypad by touch.
This lesson, as published, correlates
to the following TEKS. Any
changes/alterations to the activities
may result in the elimination of any or
all of the TEKS listed.
130.166.C
9.g. – complete payroll tax expense
forms;
TAKS Correlation:
MATH
Objective 10: The student will demonstrate an understanding of the
mathematical processes and tools used in problem solving.
Materials, Equipment and Resources:


Textbook
Internet
Teaching Strategies:


Demonstration
Observation
Activity 4.2.4 – Reporting of Taxes
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING 1
Activity Outline:
Have your students create a table with a list of forms for taxes and their use.
Form Name
Description
Form 940
Form 941
W-2
W-3
Form 8109
Ask your students to locate each form on the Internal Revenue Service Web site.
Have your students download the form and practice filling them out on the
computer when available.
Assessment:


Observation
Graded Assignment
Quality Feature
Correctly identifies forms
Locates forms on the Web site and downloads
Accurately completes forms
Completes in a timely manner
Activity 4.2.4 – Reporting of Taxes
Score
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING 1
Activity 4.2.5 – Journalizing and Posting Tax Payments
Course Title – Accounting I
Session Title – Payroll Accounting
Activity Purpose – Demonstrate skill in analyzing, journalizing and posting
tax payments.
OLD TEKS Correlations:
2010 TEKS Correlations:
This lesson, as published, correlates
to the following TEKS. Any
changes/alterations to the activities
may result in the elimination of any or
all of the TEKS listed.
120.42.C
1.b. - apply information from source
documents;
3.g. - record payroll transactions in
journals;
7.a. - follow oral and written
instructions;
7.b. - develop time management
skills by setting priorities for
completing work as scheduled.
7.c. - make decisions using
appropriate accounting concepts
This lesson, as published, correlates
to the following TEKS. Any
changes/alterations to the activities
may result in the elimination of any or
all of the TEKS listed.
130.166.C
9.f. – record the payroll in a general
journal;
TAKS Correlation:
N/A
Materials, Equipment and Resources:

Textbook
Teaching Strategies:


Demonstration
Observation
Activity Outline:
Have your students complete this chart:
Account Name
Classification
Increase
or
Decrease
Debit or
Credit
Cash
FICA Tax Payable
Federal Unemployment Tax
Payable
Activity 4.2.5 – Journalizing and Posting Tax Payments
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING 1
State Unemployment Tax Payable
Employee FIT Tax
Demonstrate journalizing and posting tax liability payments.
Have your students journalize and post all types of payroll transactions.
Assessment:


Observation
Graded Assignment
Quality Feature
Journal entries in correct columns
Debits equal credits
Entries contain a source document or explanation
Posting to ledger accurate
Accounts contain correct balances
Writing legible
Completes in a timely manner
Activity 4.2.5 – Journalizing and Posting Tax Payments
Score
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING 1