Presentation on theme: "LESSON 13-1 Payroll Accounting, Taxes, and Reports"— Presentation transcript:
1 LESSON 13-1 Payroll Accounting, Taxes, and Reports CHAPTER 134/20/2017Payroll Accounting, Taxes, and Reports
2 13-1 RECORDING PAYROLLpage 369The payroll register and employee earnings records provide all thepayroll information need to prepare payroll and payroll tax reports.The payroll journal entry is based on the total of the Earnings Totalcolumns, each deduction column, and the Net Pay column,
3 ANALYZING PAYMENT OF A PAYROLL page 370Remember Debits = Credits!
4 JOURNALIZING PAYMENT OF A PAYROLL page 371December 15. Paid cash for payroll, $4, Check No. 335.21345671. Write the date.5. Write the total amount paid to employees.2. Write the title of the account debited.6. Write the titles of accounts credited.3. Write the check number.7. Write the amounts credited.4. Write the account debited.
5 13-2 RECORDING EMPLOYER PAYROLL TAXES Employers must pay to the government taxes withheld from employee earnings.-The amounts withheld are liabilities until they are paid.Employers must ALSO pay several of their own payroll taxes:Social Security (6.2% on earnings up to $87,000.00)Medicare Tax (1.45% no earnings cap)Federal Unemployment TaxState Unemployment TaxThese taxes are based on a percentage of total employee earnings.
6 UNEMPLOYEMENT TAXABLE EARNINGS page 3742131. Enter accumulated earnings and total earnings for each employee.2. Enter unemployment taxable earnings.3. Total the Unemployment Taxable Earnings column.
7 UNEMPLOYMENT TAXESpage 375Federal Unemployment Tax - A federal tax used for state and federal administrative expenses of the unemployment program.(.8% on first $7, of total earnings)Federal Unemployment Tax=Federal Unemployment Tax Rate×Unemployment Taxable Earnings$790.00×0.8%=$6.32State Unemployment Tax - A state tax used to pay benefits to unemployed workers. (5.4% on first $7, of total earnings)State Unemployment Tax=State Unemployment Tax Rate×Unemployment Taxable Earnings$790.00×5.4%=$42.66
8 JOURNALIZING EMPLOYER PAYROLL TAXES page 376(continued on next slide)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, $ Memorandum No. 63.The liability is incurred when salaries are paid.The transaction to record payroll taxes is journalized the same day the payroll is journalized.
9 JOURNALIZING EMPLOYER PAYROLL TAXES LESSON 13-14/20/2017JOURNALIZING EMPLOYER PAYROLL TAXES(continued from previous slide)page 3762413561. Write the date.4. Write the debit amount.2. Write the title of the expense account debited.5. Write the titles of the liability accounts credited.3. Write the memorandum number.6. Write the credit amounts.
10 13-3 Reporting Withholding and Payroll Taxes page 378W-2 Wage and Tax Statement - is a report prepared by the employerthat shows total year’s earnings and amounts withheld for taxes foran employee.You get the info from theemployee earnings recordW2 is an IRS formEmployers are required bylaw to furnish a W-2 toeach employee by Jan 31.Employees attach copiesto federal and state &local tax returns.
11 EMPLOYER’S QUARTERLY FEDERAL TAX RETURN page 379(continued on next slide)Each employer must file a quarterly federal tax return showing federalincome tax, social security tax, and Medicare tax due the gov’t.Form 941 is submittedevery three months.Filed the last day of themonth following the endof the calendar quarter.Info needed to prepareForm 941 is obtainedfrom the employeeearnings record.121. Heading2. Number of employees
12 EMPLOYER’S QUARTERLY FEDERAL TAX RETURN page 379(continued on next slide)345673. Total quarterly earnings6. Social security plus Medicare taxes4. Income tax withheld5. Employee and employer social security and Medicare taxes7. Total taxes
13 EMPLOYER’S QUARTERLY FEDERAL TAX RETURN page 379(continued from previous slide)988. Total taxes for each month9. Total taxes
14 EMPLOYER ANNUAL REPORTING OF PAYROLL TAXES LESSON 13-14/20/2017EMPLOYER ANNUAL REPORTING OF PAYROLL TAXESpage 381Form W-3, Transmittal of Wage and Tax Statement is sent to theSocial Security Administration by February 28 each year.Reports the previous yearsearnings and payroll taxeswithheld for all employees.A copy of each employeeForm W-2 is attached to theForm W-3.Companies with 250+ haveto send to IRS electronically.
15 13-4 Paying Withholding & Payroll Taxes Employers must pay to the federal, state, and local governments allpayroll taxes withheld from employee earnings as well as the employerpayroll taxes.The payment of payroll taxes with the government is referred to as aDeposit. Two amounts determine how often deposits are made to thefederal government.The amount of payroll taxes collected during the current depositperiod.The amount of payroll taxes owed during the prior 12-month period.-the 12-month period that ends on June 30th of the prior yearis called the lookback period.
16 LESSON 13-14/20/2017PAYING THE LIABILITY FOR EMPLOYEE INCOME TAX, SOCIAL SECURITY TAX, AND MEDICARE TAXpage 383
17 FORM 8109, FEDERAL DEPOSIT COUPON page 384This form is used to deposit federal, social security and Medicare taxes.-Hobby Shack pays monthly.-Deposit with an authorized bank or electronically.
18 JOURNALIZING PAYMENT OF LIABILITY FOR EMPLOYEE INCOME TAX, SOCIAL SECURITY TAX, AND MEDICARE TAX page 385January 15. Paid cash for liability for employee income tax, $757.00; social security tax, $1,451.38; and Medicare tax, $339.42; total, $2, Check No. 347.153241. Write the date.3. Write the check number.2. Write the titles of the three accounts debited.4. Write the debit amounts.5. Write the amount of the credit.
19 PAYING THE LIABILITY FOR FEDERAL UNEMPLOYMENT TAX page 386Federal unemployment insurance is paid by the end of the monthfollowing each quarter if the liability amount is more than $100.-all outstanding amounts are due at the end of the calendar year.-deposit with an authorized bank.
20 JOURNALIZING PAYMENT OF LIABILITY FOR FEDERAL UNEMPLOYMENT TAX page 387January 31. Paid cash for federal unemployment tax liability for quarter ended December 31, $ Check No. 367.123451. Write the date.2. Write the title of the account debited.3. Write the check number.4. Write the debit amount.5. Write the amount of the credit to Cash.
21 JOURNALIZING PAYMENT OF LIABILITY FOR STATE UNEMPLOYMENT TAX LESSON 13-14/20/2017JOURNALIZING PAYMENT OF LIABILITY FOR STATE UNEMPLOYMENT TAXpage 387January 31. Paid cash for state unemployment tax liability for quarter ended December 31, $ Check No. 368.123451. Date2. Account debited3. Check number4. Debit amount5. Credit amount