1. © 2014 Cengage Learning. All Rights Reserved. Learning Objectives © 2014 Cengage Learning. All Rights Reserved. LO3 Calculate and record employer payroll taxes.

2. © 2014 Cengage Learning. All Rights Reserved. Employer Payroll Taxes ●Employer Social Security and Medicare taxes ●Federal unemployment tax ●A federal tax paid by employers to administer the unemployment program is called federal unemployment tax, commonly referred to as FUTA. ●State unemployment tax ●A state tax paid by employers that is used to pay benefits to unemployed workers is called state unemployment tax, commonly referred to as SUTA. SLIDE 2 LO3 Lesson 13-2

3. © 2014 Cengage Learning. All Rights Reserved. Calculating Unemployment Taxes SLIDE 3 LO3 Lesson 13-2 THREEΔGREEN PRODUCTS, INC. Calculation of FUTA Earnings for December 15, 20-- Pay Period 12345 Employee Prior Accumulated Earnings Earnings to Equal FUTA Tax Base Earnings for Current Pay PeriodFUTA Earnings Butler, John P.$27,195.00$ 0.00$1,466.25$ 0.00 Feng, Anthony R.5,260.001,740.001,494.00 Lendsey, Ann C.1,648.005,352.00240.00 Prisock, Mary G.44,000.000.002,000.000.00 Swann, Justin A.16,089.000.001,432.500.00 Wells, Cary B.6,490.00510.001,444.00510.00 $2,244.00 Enter prior accumulated earnings 1 1 Enter the difference between the FUTA tax base and prior accumulated earnings 2 2 Enter earnings for the current pay period 3 3 Enter the FUTA earnings 4 4

4. © 2014 Cengage Learning. All Rights Reserved. Journalizing Employer Payroll Taxes SLIDE 4 December 15. Recorded employer payroll taxes expense, $757.01, for the semimonthly pay period ended December 15. Taxes owed are: social security tax, $500.77; Medicare tax, $117.11; federal unemployment tax, $17.95; state unemployment tax, $121.18. Memorandum No. 44. LO3 Lesson 13-2 Payroll Taxes Expense Dec. 15 757.01 Social Security Tax Payable Dec. 15500.77 500.77 Medicare Tax Payable Dec. 15117.11 117.11 Unemployment Tax Payable—Federal Dec. 15 17.95 Unemployment Tax Payable—State Dec. 15 121.18

5. © 2014 Cengage Learning. All Rights Reserved. Journalizing Employer Payroll Taxes SLIDE 5 LO3 Lesson 13-2 1 1 Date 3 3 Memorandum NumberAccount Debited 2 2 Amount Debited 4 4 Accounts Credited 5 5 Amounts Credited 6 6

6. © 2014 Cengage Learning. All Rights Reserved. Lesson 13-2 Audit Your Understanding 1.What is the tax rate ThreeGreen must pay on employees for each of the following taxes: social security, Medicare, federal unemployment, and state unemployment? SLIDE 6 ANSWER Social security: 6.2% of employee earnings up to a maximum of $106,800.00 in each calendar year Medicare: 1.45% of total employee earnings FUTA: 0.8% on the first $7,000.00 earned by each employee SUTA: 5.4% on the first $7,000.00 earned by each employee Lesson 13-2

7. © 2014 Cengage Learning. All Rights Reserved. Lesson 13-2 Audit Your Understanding 2.What is the amount of each employee’s earnings that is subject to federal and state unemployment taxes at ThreeGreen? SLIDE 7 ANSWER The first $7,000.00 Lesson 13-2