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Chapter 8
Paying, Recording, and Reporting
Payroll and Payroll Taxes: The
Conclusion of the Payroll Process
© 2010 Prentice Hall Business
Publishing, College Accounting: A
Practical Approach, 11e by Slater
Learning Objective 1
Recording payroll and payroll taxes
LO-1
© 2010 Prentice Hall Business
Publishing, College Accounting: A
Practical Approach, 11e by Slater
Record Salaries Expense
Use Employee’s Payroll Register
 Salary/Wages Expense = gross salary of all
employees
 Salaries/Wages Payable = net pay
 Amounts of taxes withheld = “payable”
accounts

LO-1
© 2010 Prentice Hall Business
Publishing, College Accounting: A
Practical Approach, 11e by Slater
Record Salaries Expense
GENERAL JOURNAL
Date
Description
Page 3
PR
Debit
Sep 30 Wages & Salaries Expense
FIT Payable
SIT Payable
FICA-OASDI Payable
FICA-Medicare Payable
Wages & Salaries Payable
LO-3
© 2010 Prentice Hall Business
Publishing, College Accounting: A
Practical Approach, 11e by Slater
Credit
Learning Objective 2
Paying payroll and recording the paying of
payroll
Learning Objective 3
Calculating employer taxes for FICA
OASDI, FICA Medicare, FUTA, SUTA, and
workers’ compensation insurance
LO-2, 3
© 2010 Prentice Hall Business
Publishing, College Accounting: A
Practical Approach, 11e by Slater
Record Payment of Salaries
LO-2
© 2010 Prentice Hall Business
Publishing, College Accounting: A
Practical Approach, 11e by Slater
FICA, FUTA & SUTA Rates
FICA- OASDI FICA- Medicare FUTA SUTA
6.2%
1.45%
0.8%
5.6%
LO-3
© 2010 Prentice Hall Business
Publishing, College Accounting: A
Practical Approach, 11e by Slater
EIN & SS-4
EIN - Employer Identification Number is a
number assigned by the IRS to an
employer.
 SS-4 - Form filled out by an employer to
obtain an EIN.

LO-2, 3
© 2010 Prentice Hall Business
Publishing, College Accounting: A
Practical Approach, 11e by Slater
FIT and FICA
Deposited in an authorized depository or
in a Federal Reserve Bank
 If company owes < $2,500 in total taxes,
deposit quarterly
 Monthly depositor – deposit taxes on 15th
day of every month
 Semiweekly – deposit taxes once or twice
each week

LO-2, 3
© 2010 Prentice Hall Business
Publishing, College Accounting: A
Practical Approach, 11e by Slater
FIT and FICA

Form 8109 – Federal Tax Deposit
Coupon – used when making deposits by
check
LO-2, 3
© 2010 Prentice Hall Business
Publishing, College Accounting: A
Practical Approach, 11e by Slater
Record Payment of Form 941
Taxes
LO-2, 3
© 2010 Prentice Hall Business
Publishing, College Accounting: A
Practical Approach, 11e by Slater
Exercise 8-4
LO-2, 3
© 2010 Prentice Hall Business
Publishing, College Accounting: A
Practical Approach, 11e by Slater
Form 941
Employer’s Quarterly Federal Tax Return
 Completed after the end of each calendar
quarter
 Reports total FICA (OASDI and
Medicare) taxes owed plus amount of FIT
withheld from employee’s pay

LO-2, 3
© 2010 Prentice Hall Business
Publishing, College Accounting: A
Practical Approach, 11e by Slater
Form 941 (Partial)
LO-2, 3
© 2010 Prentice Hall Business
Publishing, College Accounting: A
Practical Approach, 11e by Slater
Exercise 8-2
LO-3
© 2010 Prentice Hall Business
Publishing, College Accounting: A
Practical Approach, 11e by Slater
Record Payroll Tax Expense
LO-3
© 2010 Prentice Hall Business
Publishing, College Accounting: A
Practical Approach, 11e by Slater
Exercise 8-3
LO-3
© 2010 Prentice Hall Business
Publishing, College Accounting: A
Practical Approach, 11e by Slater
Learning Objective 4
Paying FUTA, SUTA, and workers’
compensation insurance
LO-4
© 2010 Prentice Hall Business
Publishing, College Accounting: A
Practical Approach, 11e by Slater
Paying FUTA Tax
If tax owed for calendar year < $500,
employer pays to the IRS by end of
January of the next year (30 DAYS)
 If amount owed > $500, employer pays
quarterly due by the end of the month
following the end of the calendar quarter
(30 DAYS)

LO-4
© 2010 Prentice Hall Business
Publishing, College Accounting: A
Practical Approach, 11e by Slater
Record Payment of FUTA Tax
LO-4
© 2010 Prentice Hall Business
Publishing, College Accounting: A
Practical Approach, 11e by Slater
Federal Unemployment Tax
Returns

Form 940
◦ Prepared at end of calendar year
◦ Reports the amount of unemployment tax
due for the year
LO-4
© 2010 Prentice Hall Business
Publishing, College Accounting: A
Practical Approach, 11e by Slater
Form 940 (Partial)
© 2010 Prentice Hall Business
Publishing, College Accounting: A
Practical Approach, 11e by Slater
LO-4
Paying SUTA Tax
Paid to state government
 Typically due by end of month following
each calendar quarter

LO-4
© 2010 Prentice Hall Business
Publishing, College Accounting: A
Practical Approach, 11e by Slater
Record Payment of SUTA Tax
LO-4
© 2010 Prentice Hall Business
Publishing, College Accounting: A
Practical Approach, 11e by Slater
Record Payment of Workers’
Compensation Insurance
LO-4
© 2010 Prentice Hall Business
Publishing, College Accounting: A
Practical Approach, 11e by Slater
Exercise 8-8 part (a)
LO-4
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Publishing, College Accounting: A
Practical Approach, 11e by Slater
Exercise 8-8 parts (b & c)
LO-4
© 2010 Prentice Hall Business
Publishing, College Accounting: A
Practical Approach, 11e by Slater
Learning Objective 5
Preparing Forms W-2, W-3, and 940-EZ
LO-5
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Publishing, College Accounting: A
Practical Approach, 11e by Slater
W-2: Wage and Tax Statement
Prepared by employer each calendar year
Provides summary of gross earnings and
deductions to each employee
 Copies:


◦ Employee
◦ IRS
◦ Any state where employees’ income taxes have been
withheld
◦ Social Security Administration
◦ Company records
LO-5
© 2010 Prentice Hall Business
Publishing, College Accounting: A
Practical Approach, 11e by Slater
Sample W-2
© 2010 Prentice Hall Business
Publishing, College Accounting: A
Practical Approach, 11e by Slater
LO-5
W-3: Transmittal of Income and Tax
Statements
Completed by employer to verify the
number of W-2’s and amounts withheld
 Sent to a Social Security Administration
data processing center along with copies
of each employee’s W-2

LO-5
© 2010 Prentice Hall Business
Publishing, College Accounting: A
Practical Approach, 11e by Slater
Sample W-3
LO-5
© 2010 Prentice Hall Business
Publishing, College Accounting: A
Practical Approach, 11e by Slater
End of Chapter 8
© 2010 Prentice Hall Business
Publishing, College Accounting: A
Practical Approach, 11e by Slater
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