1. LESSON 13-2 RECORDING EMPLOYER PAYROLL TAXES

2. Employee vs. Employer Taxes Employee Taxes ◦Federal Income Tax ◦Social Security Tax ◦Medicare Tax Employer Taxes ◦Social Security Tax ◦Medicare Tax ◦Unemployment Tax – Federal ◦Unemployment Tax - State Employer Payroll Taxes are an expense of the business.

3. Unemployment Tax Unemployment taxes paid to both federal and state. Tax Base = $7,000.00 Unemployment Taxable Earnings ◦Accumulated Earnings plus Current Period Earnings ◦Compare to $7,000.00. ◦Use Employee Earnings Record and Payroll Register

4. Calculating Unemployment Taxable Earnings Accumulate Earnings as of November 30, 2008 Total Earnings for December 15, 2008 Pay Period Unemployment Taxable Earnings $7,020.00$780.00 $5,520.00$460.00 $6,300.00$850.00 Total ---------- $460.00 $700.00 $1,160.00

5. UNEMPLOYMENT TAXES 5 Federal Unemployment Tax = Federal Unemployment Tax Rate × Unemployment Taxable Earnings State Unemployment Tax = State Unemployment Tax Rate × Unemployment Taxable Earnings $6.32=0.8%×$790.00 $42.66=5.4%×$790.00

6. JOURNALIZING EMPLOYER PAYROLL TAXES 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 unemployment tax, $42.66. Memorandum No. 63. (continued on next slide)

7. JOURNALIZING EMPLOYER PAYROLL TAXES 1 2 3 5 4 6 4. Write the debit amount.1. Write the date. 5. Write the titles of the liability accounts credited. 2. Write the title of the expense account debited. 6. Write the credit amounts.3. Write the memorandum number. (continued from previous slide)

8. Problems Work Together 13-2 (Text pg. 377) On Your Own 13-2 (Text pg. 377)