CP ACCOUNTING
8
Employer Taxes, Payments & Reports
PERFORMANCE OBJECTIVES
1. Calculate the amount of payroll tax expense and journalize the related entry.
2. Journalize the entry for the deposit of employees’ federal income taxes withheld and
FICA taxes (both employees’ withheld & employer’s matching share) and prepare the
deposit coupon.
3. Journalize the entries for the payment of employer’s state and federal unemployment
taxes.
4. Journalize the entry for the deposit of employees’ state income taxes withheld.
5. Complete Employer’s Quarterly Federal Tax Return, Form 941.
6. Prepare W-2 and W-3 forms and Form 940
7. Calculate the premium for workers’ compensation insurance, and prepare the entry for
payment in advance.
8. Determine the amount of the end-of-year adjustments for (a) workers’ compensation
insurance and (b) accrued salaries and wages, and record the adjustments.
KEY POINTS
1. The Employer Identification Number EIN must be listed on every federal tax report.
2. Payroll taxes, consisting of the employer’s FICA taxes along with state and federal
unemployment taxes, are debited to the Payroll Tax Expense account.
3. The amount of an employer’s FICA taxes and unemployment taxes are determined by
multiplying total taxable earnings subject to appropriate maximum levels (from the
payroll register) by appropriate tax rates.
4. The maintenance of adequate records is necessary for compiling information for
various tax returns.
5. An employer is not liable for payroll taxes until employees are actually paid.
6. A tax calendar is useful as a schedule for payment of taxes and submission of reports.
KEY TERMS:
Electronic Federal Tax Payment EFTPS
Employer Identification Number
Federal Unemployment Tax (FUTA)
Form 940
Form 941
Form 941 -V
Form W-2
Form W-3
Payroll Tax Expense
Quarter
State Unemployment Tax (SUTA)
Workers’ Compensation Insurance
LECTURE OUTLINE
I.
II.
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Employer Identification Number
Employer’s Payroll Taxes
A. Payroll Tax Expense Account
B. Journal Entry for Payroll Tax Expense
P/R tax expense
xxx
FICA Tax Payable
SUTA Payable
FUTA Payable
xxx
xxx
xxx
III.
Sequential Order of Payroll Entries
A. Payroll entry from P/R register
B. Entry to record P/R Tax Expense
C. Entry to transfer cash to P/R cash account
IV.
Payment of Payroll Taxes
A. Employees’ Income Taxes & Employee/Employer share of FICA
Employee’s FIT
xxx
FICA Tax Payable
xxx
Cash
xxx
V.
B. State Unemployment Taxes
SUTA Tax Payable
Cash
xxx
C. Federal Unemployment Taxes
FUTA Tax Payable
Cash
xxx
D. State Income Taxes
Employee’s State Income Tax
Cash
xxx
xxx
xxx
xxx
Workers’ Compensation Insurance
A. Journal entry for estimated premium paid in advance
Prepaid Insurance, WC
xxx
Cash
xxx
B. Adjusting Entries
For compensation Insurance expired:
WC Insurance Expense
Prpd Ins
xxx
xxx
For Additional Compensation Insurance Premium Owed:
WC Insurance Exp
xxx
WC Ins Payable
xxx
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