Chapter 3 Departmental Payroll

After the payroll register has been prepared, a check is written to transfer the total net pay amount from the regular business checking account to the payroll checking account All payroll checks are written from the payroll checking account After all checks have been cashed, this account has a zero balance – Internal Control PAYROLL BANK ACCOUNT Automatic check deposit – employer sends check to the employee’s bank Electronic Funds Transfer (EFT) – employer transfers funds directly from employer account to employee account (no check is cut) Lesson 3-3, page 79

General Bank Account = 31, , to payroll PAYROLL BANK ACCOUNT Lesson 3-3, page 79

Lesson 3-3, page 80 JOURNALIZING PAYMENT OF A PAYROLL – error p.80 1.Write the date Record the salary expense accounts. 3 3.Enter the check number. 4 4.Write the salary expense amounts. 5 5.Enter the liability accounts. 6 6.Record the liability amounts. 7 7.Write the net pay. All #s come from the Payroll Register – p. 72, =

Employers must pay 4 taxes to the government 1.Employer Social Security Tax – 6.5% 2.Medicare Tax – 1.5% 3.Federal Unemployment Tax –.8% 4.State Unemployment Tax – 5.4% -Based on a percentage of employee earnings Total earnings subject to unemployment tax is referred to as unemployment taxable earnings Lesson 3-3, pages 79,80,81 EMPLOYER PAYROLL TAXES Fed 6.2 State 5.4 Effective.8 deduction ~*~applied only to the first $7, earned by each employee for each calendar year

Lesson 3-3, page 81 JOURNALIZING EMPLOYER PAYROLL TAXES 1.Write the date. 1 3.Enter the source document. 3 4.Record the amount of payroll taxes. 4 2.Write the expense account. 2 6.Enter the liability amounts. 6 5.Enter the liability accounts. 5 Total Gross Earnings = (p.72) x 6.5%= x 1.5%= x.8%=63.67 x 5.4%=

Lesson 3-3, page 82 JOURNALIZING PAYMENT OF FEDERAL INCOME TAX, SOCIAL SECURITY TAX, AND MEDICARE TAX LIABILITY 5.Record the amount paid. 5 1.Write the date. 1 3.Write the check number. 3 4.Enter the liability amounts. 4 2.Enter the liability accounts. 2 Pay period ended July 2, paid July 9, deposited July 15 x2 Social Security & Medicare Taxes are doubled (p. 72)

29 Lesson 3-3, page 83 JOURNALIZING PAYMENT OF FEDERAL & STATE UNEMPLOYMENT TAX LIABILITIES 5.Record the amounts paid. 5 1.Write the date. 1 3.Write the check numbers. 3 4.Enter the liability amounts. 4 2.Enter the liability accounts. 2 Quarterly Earnings x.8% = Quarterly Earnings x 5.4% =