Recording A Payroll
LESSON 13-1
PAYROLL REGISTER
page 369
Salary Expense
Liabilities
Cash
Debited
Credited
Credited
Until payroll is recorded in the journal and then posted to the ledger
accounts, the accounts are not up to date.
ANALYZING PAYMENT OF A
PAYROLL
page 370
Deductions
Total Earnings
Net Pay
JOURNALIZING PAYMENT OF A
PAYROLL
December 15. Paid cash for payroll, $4,609.46. Check No. 335.
page 371
Audit Your
Understanding
What account title is used
journalize the total earnings
column of the payroll register?
• Salary Expense
What account title is used to
journalize the federal income tax
column of the payroll register?
• Employee Income Tax Payable
Audit Your
Understanding
What account title is used to
journalize a Social Security tax
column in the payroll register?
• Social Security Tax Payable
Work Together
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13-2 New Vocabulary
• Federal Unemployment Tax: A
federal tax used for state and
federal administrative
expenses of the
unemployment program
• State Unemployment Tax: A
state tax used to pay benefits
to unemployed workers
UNEMPLOYMENT TAXABLE
EARNINGS
page 374
First:
2
• Determine if
the tax base
has been
met.
3
1
1. Enter accumulated earnings and total earnings for each
employee.
2. Enter any unemployment taxable earnings.
3. Total the Unemployment Taxable Earnings column.
UNEMPLOYMENT TAXES
Federal
Federal
Unemployment = Unemployment
Tax Rate
Tax
Unemployment
×
Taxable
Earnings
$790.00
2
page 375
Taxes
×
0.8%
=
$6.32
State
State
Unemployment
× Unemployment = Unemployment
Taxable
Tax Rate
Tax
Earnings
$790.00
×
5.4%
=
$42.66
JOURNALIZING EMPLOYER
PAYROLL TAXES(continued on next slide)
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.
JOURNALIZING EMPLOYER
PAYROLL TAXES
(continued from previous slide)
page 376
Audit Your
Understanding
• What is the tax rate Hobby Shack must
pay on employees for each of the
following taxes: Social Security,
Medicare, federal unemployment, and
state unemployment?
– Social Security: 6.2% of earnings up to a
maximum of $87,000 in each calendar year;
– Medicare: 1.45% of total employee earnings;
– Federal unemployment: 0.8% on the first
$7,000 earned by each employee;
– State unemployment: 5.4% on the first $7,000
earned by each employee
Audit Your
Understanding
What is the amount of each
employee’s total earnings that
are subject to federal and state
unemployment taxes at Hobby
Shack?
• Only the first $7,000 each
employee earns
Work Together
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13-3 EMPLOYER ANNUAL
REPORT TO EMPLOYEES OF
TAXES WITHHELD
page 378
EMPLOYER’S QUARTERLY
FEDERAL
page 379
TAX RETURN (continued on next slide)
1
2
1. Heading
2. Number of employees
EMPLOYER’S QUARTERLY FEDERAL
TAX RETURN
page 379
(continued on next slide)
3
4
5
6
7
3. Total quarterly earnings
4. Income tax withheld
5. Employee and employer social
security and Medicare taxes
6. Social security plus
Medicare taxes
7. Total taxes
EMPLOYER’S QUARTERLY FEDERAL
TAX RETURN
page 379
(continued from previous slide)
9
8
8
8. Total taxes for each
month
8
9. Total taxes
EMPLOYER ANNUAL REPORTING
OF PAYROLL TAXES
page 381
Audit Your Understanding
When must employers provide
a W–2 statement to their
employees?
• By January 31
What taxes are included in the
quarterly federal tax return
filed by the employer?
• Federal income tax, Social
Security tax, and Medicare
tax
Work Together
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LESSON 13-4
New Vocabulary
• Lookback Period:
The 12month period that ends on June
30 of the prior year
– (Helps to determine when payroll
taxes are due to the government.)
PAYING THE LIABILITY FOR EMPLOYEE
INCOME TAX, SOCIAL SECURITY TAX, AND
MEDICARE TAX
page 383
FORM 8109,
FEDERAL DEPOSIT COUPON
page 384
JOURNALIZING PAYMENT OF LIABILITY FOR
EMPLOYEE INCOME TAX, SOCIAL SECURITY
TAX, AND MEDICARE TAX
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.
page 385
PAYING THE LIABILITY FOR
FEDERAL UNEMPLOYMENT TAX
page 386
JOURNALIZING PAYMENT OF LIABILITY
FOR FEDERAL UNEMPLOYMENT TAX
page 387
January 31. Paid cash for federal unemployment tax liability for
quarter ended December 31, $34.60. Check No. 367.
1
2
3
4
5
JOURNALIZING PAYMENT OF LIABILITY
FOR STATE UNEMPLOYMENT TAX
January 31. Paid cash for state unemployment tax liability for
quarter ended December 31, $233.55. Check No. 368.
page 387
Work Together
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IQ Test (for Professionals)
• How do you put a giraffe into
a refrigerator?
• Open the refrigerator door,
put the giraffe in, and close
the door.
• This question tests whether
or not you do simple things in
a complicated way.
IQ Test
• How do you put an elephant
into a refrigerator?
• Open the refrigerator door,
take the giraffe out, put the
elephant in, and close the
door.
• This question tests your
prudence and practicality.
IQ Test
• The Lion King is hosting an
animal conference. All
animals except one attend.
Which one does not attend?
• The elephant. The elephant
is still in the refrigerator.
• This question tests whether
or not you have
comprehensive thinking
skills.
IQ Test
• If you did not answer the
first three questions
correctly, this next
question is your last
chance to show your
qualifications as a
professional.
IQ Test
• There is a river inhabited by
crocodiles. How do you
manage to get to the other
side?
• Swim through it. All of the
animals, including the
crocodiles, are attending the
animal conference. (Except
for the elephant, of course.)
IQ Test
• Don’t be frustrated if you failed this
test. According to Anderson
Consulting Worldwide, about 90%
of the professionals failed the test.
• However, many preschoolers got it
correct, thus disproving the popular
theory that most “professionals”
have the brains of a four-year old.
The End