Ch13-2 Review Problems

Section 3Tax Liability Payments and Tax Reports What You’ll Learn  How to pay payroll tax liabilities.  Which tax reports are prepared and filed. What You’ll Learn  How to pay payroll tax liabilities.  Which tax reports are prepared and filed.

Why It’s Important Business owners must pay their payroll liabilities and file payroll tax reports promptly and accurately. Why It’s Important Business owners must pay their payroll liabilities and file payroll tax reports promptly and accurately. Section 3Tax Liability Payments and Tax Reports (con’t.) Key Terms  Federal Tax Deposit Coupon  Electronic Federal Tax Payment System  Form 940  Form 941  Form W-2  Form W-3 Key Terms  Federal Tax Deposit Coupon  Electronic Federal Tax Payment System  Form 940  Form 941  Form W-2  Form W-3

FICA and Federal Income Taxes One payment is made for: FICA and Federal Income Taxes One payment is made for:  social security and Medicare taxes (both the employees’ and the employer’s shares) and  employees’ federal income taxes withheld.  The Federal Tax Deposit Coupon (Form 8109) is prepared and sent with the check. The form identifies the type of tax and the tax period.  Refer to Figure 13-3 on p328.  social security and Medicare taxes (both the employees’ and the employer’s shares) and  employees’ federal income taxes withheld.  The Federal Tax Deposit Coupon (Form 8109) is prepared and sent with the check. The form identifies the type of tax and the tax period.  Refer to Figure 13-3 on p328. Section 3Tax Liability Payments and Tax Reports (con’t.)

Payment of Federal Payroll Tax Liabilities Section 3Tax Liability Payments and Tax Reports (con’t.) JOURNAL ENTRY

Section 3Tax Liability Payments and Tax Reports (con’t.) JOURNAL ENTRY Payment of State Income Taxes

Section 3Tax Liability Payments and Tax Reports (con’t.) JOURNAL ENTRY Payment of Federal Unemployment Taxes

Section 3Tax Liability Payments and Tax Reports (con’t.) JOURNAL ENTRY Payment of State Unemployment Taxes

Payment of Other Payroll Liabilities  insurance premiums  union dues  charitable contributions  insurance premiums  union dues  charitable contributions Section 3Tax Liability Payments and Tax Reports (con’t.) JOURNAL ENTRY

Preparing Payroll Tax Reports  Form W-2 summarizes an employee’s earnings and withholdings for the calendar year.  Form 940 to report the employer’s unemployment (state and federal) taxes.  Form 941 is the employer’s quarterly federal tax return on which accumulated amounts of FICA and federal income tax withheld from employees’ earnings, as well as FICA tax owned by the employer, are reported.  Form W-2 summarizes an employee’s earnings and withholdings for the calendar year.  Form 940 to report the employer’s unemployment (state and federal) taxes.  Form 941 is the employer’s quarterly federal tax return on which accumulated amounts of FICA and federal income tax withheld from employees’ earnings, as well as FICA tax owned by the employer, are reported. Section 3Tax Liability Payments and Tax Reports (con’t.)

Transmittal of Wage and Tax Statements Form W-3 summarizes the information contained on the employees’ Forms W-2. Transmittal of Wage and Tax Statements Form W-3 summarizes the information contained on the employees’ Forms W-2. Section 3Tax Liability Payments and Tax Reports (con’t.)

You will need to read this chapter in detail. I did not cover all of the information in lecture. There are a lot of details you should be aware of. Section 3Tax Liability Payments and Tax Reports (con’t.)

Demonstration Problems 13-4 & 13-5

$ $ $82.50 Employee’s Federal Income Tax Payable Oct Social Security Tax Payable Medicare Tax Payable Cash In Bank Check #534 $ Cash In Bank Check #535 6 Employees State Income Tax Payable Cash In Bank Check #536 6 Federal Unemployment Tax Payable Cash In Bank Check #537 6 State Unemployment Tax Payable $323.46$47.92

Cash In Bank Check # Hospital Ins. Premiums Payable Cash In Bank Check # Life Ins. Premiums Payable Cash In Bank Check # Credit Union Payable Cash In Bank Check # U.S. Savings Bond Payable March

Check Your Understanding p337 Thinking Critically 1&2 Analyzing Accounting Problem 13-4 & 13-5 Thinking Critically 1&2 Analyzing Accounting Problem 13-4 & 13-5 Section 3Tax Liability Payments and Tax Reports (con’t.)