Chapter 13
Payroll Taxes – Journalizng,
Reporting and Paying
• EVERY PAY PERIOD:
So…
– Pay employees every pay period
• Payroll Register
• Employee Earnings Record
– Use Memorandum to journalize employer payroll taxes (contributions)
• General Journal
• MONTHLY:
– Pay employee and employers contributions electronically (formerly Federal
Deposit Coupon)
• Use Cash Payment Journal
• QUARTERLY:
– Report employee and employers payroll taxes using a 941 form
• ANNUALLY:
– Send a W-3 Transmittal to the Federal government
– Send a NJ W-3 Transmittal to the State government
– Send W-2s to your employees
13-1: Journalizing
• Where? Cash payment special journal
– Check number of payroll transfer
Salaries Expense Debit - Total Earnings
Withholding Payables Credits – Each payroll tax
Cash Credit – Net amount of check
Use T accounts (Text p. 370)
WT 13-1, OYO 13-1, App 13-1
13-2: Employer Contributions
• Payroll Register shows EMPLOYEE contributions
• EMPLOYER contributions must be made:
– Social Security – 6.2% with a maximum of $87,000
– Medicare – 1.45%
– Federal Unemployment Tax (FUTA) – 0.8% max of $7,000
– State Unemployment Tax (SUTA) – 5.4% max of $7,000
13-2: Employer Contributions
HOBBY SHACK
Taxable Earnings
For December 15, 2013, Pay Period
Employee
Accumulated Earnings
as of Nov 30, 2013
Aranda, Susan A.
Total Earnings for
Dec. 15, 2013 Pay
Period
Unemployment
Taxable Earnings
(Max $7,000)
Social Security
Taxable Earnings
(Max $87,000)
21,115.00
968.00
--
968.00
5,595.25
550.00
550.00
550.00
Kellogg, Janice P.
39,840.00
1,910.00
--
1,910.00
Mendel, Ann M
2,030.00
240.00
240.00
240.00
Selby, Rick E
22,746.00
1,137.00
--
1,137.00
Young, Justin L.
19,816.00
906.40
--
906.40
5,711.40
790.00
5,711.40
Drew, Paul S.
TOTALS
Social Security Tax Payable, 6.2%
___________354.11_
Medicare Tax Payable, 1.45%
____________82.83__
Unemployment Tax Payable – Federal, 0.8%
_____________6.32__
Unemployment Tax Payable – State, 5.4%
____________42.66__
Total Payroll Taxes (Employer Contributions)
____________485.91_
Practice: WT 13-2
• 13-2 Yer Contributions\13-2 WT Yer
Contributions.xls
Complete OYO 13-2 – Employer Payroll Tax Chart
13-2: Employer Contributions
• Journalized each payroll period as a payable
– Not paid til quarter or year end
– Use Memorandum
GENERAL JOURNAL
Date
9
15
ACCOUNT TITLE
Payroll Taxes Expense
10
Social Security Tax Payable
11
Medicare Tax Payable
12
Unemployment Tax Payable - Federal
13
Unemployment Tax Payable – State
Page 12
DOC
NO.
M63
POST
REF.
DEBIT
CREDIT
9
485.92
354.11
10
82.83
11
6.32
12
42.66
13
14
14
15
15
Practice
• 13-2 WT
• 13-2 Yer Contributions\13-2 WT Yer
Contributions.xls
Complete 13-2 OYO
PUT IT ALL TOGETHER: Application Problem 13-2
13-3: The W-2 Employer Annual Report
to Employees of Taxes Withheld
• At year end, prepare a W-2 (Text p. 378)
– Submitted to: Federal and State governments,
employee, and filed in company files
•
•
•
•
•
•
Business’s name, address and EIN
Employee’s name, address and SS #
Total Wages (Box 1, 3 and 5)
Total Fed income tax withheld (Box 2)
Total SS withheld (Box 4)
Total Medicare withheld (Box 6)
Employees use this W-2 to file their personal income taxes.
13-3: The W-3 Employer Annual
Reporting of Payroll Taxes
• At year end, prepare a W-3 (Text p. 381)
– Submitted to: Federal and State governments, and
filed in company files
•
•
•
•
•
•
Business’s name, address and EIN
Employee’s name, address and SS #
Total Wages for the Business (Box 1, 3 and 5)
Total Fed income tax withheld for the Business (Box 2)
Total SS withheld for the Business (Box 4)
Total Medicare withheld for the Business (Box 6)
The total of all employees’ W-2s
13-3: The 941 – Employer’s Quarterly
Federal Tax Return
(Text p. 379)
• Filed the month following each fiscal quarter
– Due April 30th, July 30th, Oct 30th, Jan 30th
– Reports the amount of employees’ withholding plus
employer contributions that is owed and has been
paid
Form 941 at irs.gov publications
Practice:
13-3 Work Together
With a partner: 13-3 OYO
Independently: 13-3 App
13-4: Form 8109, Federal Deposit
Coupon
• Coupons are no longer in use
• File electronically - MONTHLY
• Once payment is filed, need to journalize
Debit:
Employee Income Tax Payable
Social Security Tax Payable
Medicare Tax Payable
Credit:
Cash w/ check number paid for employee and
employer taxes
• EVERY PAY PERIOD:
So…
– Pay employees every pay period
• Payroll Register
• Employee Earnings Record
– Use Memorandum to journalize employer payroll taxes (contributions)
• General Journal
• MONTHLY:
– Pay employee and employers contributions electronically (formerly Federal
Deposit Coupon)
• Use Cash Payment Journal
• QUARTERLY:
– Report employee and employers payroll taxes using a 941 form
• ANNUALLY:
– Send a W-3 Transmittal to the Federal government
– Send a NJ W-3 Transmittal to the State government
– Send W-2s to your employees