1. Chapter 14: Payroll

2. ©The McGraw-Hill Companies, Inc., 2004 2 of 42Payroll Employees and employers are required to pay local, state, and federal payroll taxes. Employers must withhold taxes from each employee’s paycheck. The amount withheld for federal taxes is determined from tax tables published by the IRS. The amount withheld depends on the employee’s earnings and the number of exemptions or withholding allowances claimed by the employee. FICA taxes and Medicare taxes are also deducted from employee’s paychecks. It is the purpose of Chapter 14 to show you how to use Peachtree to enter payroll default information, add employees, make the correct journal entries for payroll, and to print the various payroll reports.

3. ©The McGraw-Hill Companies, Inc., 2004 3 of 42 Software Objectives, p. 511 Explore the Payroll Setup Wizard. Enter initial payroll fields. Enter employee and employer default information. Journalize and post payroll journal entries. Print paychecks. Print financial statements Make four backups: 2 for Jessica's Sales & Service; 2 for the end-of-chapter exercises.

4. ©The McGraw-Hill Companies, Inc., 2004 4 of 42 Web Objectives, p. 511 Use your Internet browser to go to the book’s website at www.mhhe.com/yacht2003 www.mhhe.com/yacht2003 Go to the Internet Activity link on the book’s website. Then, select WEB EXERCISES PART 3. Complete the third web exercise in Part 3, “The Salary Calculator.” Use a word processing program to write summaries of the websites that you visited

5. ©The McGraw-Hill Companies, Inc., 2004 5 of 42 Peachtree Tips Peachtree Tips The exercises in Part 3 are cumulative. Chapters 11, 12 and 13 must be completed before starting Chapter 14. Restore the Chapter 13.ptb back up made on page 504 to start Chapter 14. The “Payroll Entry” window is the Payroll Journal. The educational version of the software included with the textbook includes payroll tax withholding tables for the 50 states. The withholding amounts are for example purposes only and do not reflect accurate payroll taxes. To learn more about Peachtree Software’s payroll tax service, visit their website at www.peachtree.com/taxservice/default.cfm. www.peachtree.com/taxservice/default.cfm

6. ©The McGraw-Hill Companies, Inc., 2004 6 of 42 Peachtree Tips (concluded) Peachtree Tips (concluded) Follow these steps to check the Peachtree version and tax table version. 1.Start Windows, then Peachtree. Open any company. 2.From the menu bar, click on Help, About Peachtree Accounting. The Installed Tax Service shows 19000101.

7. ©The McGraw-Hill Companies, Inc., 2004 7 of 42 Backing Up Chapter 14 Disk Backup Name KB Page Nos. 18 of 18 A:\Chapter 14 Begin 131 KB 531-532 A:\Chapter 14 136 KB 545 A:\Exercise 14-1 110 KB 551 A:\Exercise 14-2 123 KB 552 TOTAL KB 500 KB.

8. ©The McGraw-Hill Companies, Inc., 2004 8 of 42 Chapter 14 Topics 1. Software & web objectives, p. 511 2. Getting started, pp. 514-515 a. Checking your global tax table version, pp. 515-516 b.Establishing the payroll account, p. 517 3. Initial payroll fields, pp. 517-522 4. Entering Employee and Employer Default Information, pp. 522-527 5. Entering employee maintenance information, pp. 528-531 6. Backing up your data, p. 531-532 7. Payroll entry, pp. 532-537 8. Printing the payroll journal, pp. 538-540 9. Printing the general ledger trial balance, pp. 540-541

9. ©The McGraw-Hill Companies, Inc., 2004 9 of 42 Chapter 14 Topics (concluded) 10. Printing the financial statements, pp. 542-544 11. Backing up Chapter 14 data, p. 545 12. Internet activity, p. 545 13. Summary and review, p. 546 a. Going to the net, pp. 546-547 b. Multiple-choice questions, pp. 547-549 c. Exercise 14-1, pp. 549-551 d. Exercise 14-2, p. 552 e. Chapter 14 index, p. 553

10. ©The McGraw-Hill Companies, Inc., 2004 10 of 42 Getting started, pp. 514-515 Complete steps 1 – 2i on pages 514-515. Remember, you must complete Chapters 11, 12,and 13 before starting Chapter 14.

11. ©The McGraw-Hill Companies, Inc., 2004 11 of 42 Checking Your Global Tax Table Version, p. 516 From the menu bar, click on Help, then About Peachtree Accounting. The “Peachtree Complete Accounting” screen appears. Read the information on page 516. Click on to close this window.

12. ©The McGraw-Hill Companies, Inc., 2004 12 of 42 Establishing the payroll account, p. 517 In order to establish the payroll checking account, transfer funds from San Diego Bank (Account No. 10200) to the Payroll Checking Account (Account No. 10300). Read the transaction information on p. 517.

13. ©The McGraw-Hill Companies, Inc., 2004 13 of 42 Payroll Setup Wizard, p. 518 Click on Maintain, Default Information, then Payroll Setup Wizard. Click on.

14. ©The McGraw-Hill Companies, Inc., 2004 14 of 42 Payroll Setup Wizard, continued, p. 519 In the “State” box, select “CA.” Type 3.4 in the “Unemployment Percent” box. Click on the “Sales Defaults” folder tab.

15. ©The McGraw-Hill Companies, Inc., 2004 15 of 42 Payroll Setup Wizard, continued, p. 520 Click on. The “Default Payroll G/L Accounts” screen appears. You will make changes to these defaults on page 526 and 527. Click on.

16. ©The McGraw-Hill Companies, Inc., 2004 16 of 42 Payroll Setup Wizard, continued, p. 520 Read the information on the “Payroll Tax Table Information” screen. Click on. Then, click on at the next three screens (see steps 7 - 10 on p. 521).

17. ©The McGraw-Hill Companies, Inc., 2004 17 of 42 Payroll Setup Wizard, continued, p. 521 Read the information on the “Payroll Field Preview” screen. Click on the “EmployER Fields” folder tab.

18. ©The McGraw-Hill Companies, Inc., 2004 18 of 42 Payroll Setup Wizard (concluded) p. 522 Make sure you have selected the “EmployER Fields” folder tab. Click on. Read the information on the “Payroll Setup Complete” screen, then click on.

19. ©The McGraw-Hill Companies, Inc., 2004 19 of 42 Entering employee and employer default information, pp. 522-523 Click on Maintain, Default Information, then Employees. Complete steps 1 and 2 on p. 523. Click on.

20. ©The McGraw-Hill Companies, Inc., 2004 20 of 42 Assign Payroll Fields for EmployEE Paid Taxes, pp. 523-524 Click on the arrow next to “EmployEE Paid Taxes.” This screen is shown at the top of p. 524. Click on.

21. ©The McGraw-Hill Companies, Inc., 2004 21 of 42 Assign Payroll Fields for EmployER Paid Taxes, p. 524 Click on the arrow next to “EmployER Paid Taxes.” Click on the down-arrow in the SDI field. Click on to return to the “Employee Defaults” window. Then, select the “Pay Levels” tab.

22. ©The McGraw-Hill Companies, Inc., 2004 22 of 42 Employee Defaults, pp. 524-525 Make sure you have selected the “Pay Levels” tab on the “Employee Defaults” window. Then for “Overtime,” select Account No. 77600, Overtime Expense. This screen is shown on p. 525.

23. ©The McGraw-Hill Companies, Inc., 2004 23 of 42 Employee Defaults (continued) pp. 525-526 Complete steps 10–17 on pp. 525-526. This screen is shown after step 17, p. 526

24. ©The McGraw-Hill Companies, Inc., 2004 24 of 42 “EmployER Fields” tab, p. 527 Complete steps 18 and 19 on pp. 526-527. Click on to save your changes and return to the menu bar.

25. ©The McGraw-Hill Companies, Inc., 2004 25 of 42 Entering employee maintenance information, pp. 528-529 Click on Maintain, then Employees/Sales Reps. This screen is shown on page 528. Type in the employee information shown in step 2 on pp. 528-529.

26. ©The McGraw-Hill Companies, Inc., 2004 26 of 42 Maintain Employees/Sales Reps, pp. 529-530 Complete steps 3 – 6 on p. 529. This screen illustration is on p. 530. Complete steps 7 – 13 on pp. 530-531.

27. ©The McGraw-Hill Companies, Inc., 2004 27 of 42 Backing up your data, pp. 531-532 Complete steps 1 – 9 on pages 531 and 532 to back up your data. Use Chapter 14 Begin as the back up name.

28. ©The McGraw-Hill Companies, Inc., 2004 28 of 42 Payroll Entry, pp. 532-534 Read the information on pages 532-534. Complete steps 1 – 10 on pages 532-534 to issue a payroll check. Click on the “Print” icon.

29. ©The McGraw-Hill Companies, Inc., 2004 29 of 42 Print Forms: Payroll Checks, p. 535 Highlight “OCR - PR Preprint 1 Stub.” Read the “comment” on page 535. Click.

30. ©The McGraw-Hill Companies, Inc., 2004 30 of 42 First Check Number, p. 536 Type 101 as the “First Check Number.” Click on. Compare your check with the one shown on page 536. Complete steps 17 and 18 on p. 537. Compare your check with the one shown on p. 537. Then, issue the checks shown in step 19.

31. ©The McGraw-Hill Companies, Inc., 2004 31 of 42 Printing the payroll journal, p. 538-540 Complete steps 1 and 2 on p. 538. Compare your printout of the payroll journal to the one shown on pp. 538-540.

32. ©The McGraw-Hill Companies, Inc., 2004 32 of 42 Printing the general ledger trial balance, p. 540-541 Complete steps 1 and 2 on p. 540. Compare your printout of the general ledger trial balance to the one shown on p. 541.

33. ©The McGraw-Hill Companies, Inc., 2004 33 of 42 Printing the financial statements, pp. 542-544 Complete steps 1-3 on pp. 542-544. Compare your financial statements with the ones shown on pages 542, 543, and 544.

34. ©The McGraw-Hill Companies, Inc., 2004 34 of 42 Backing Up Chapter 14 Data, p. 545 Complete steps 1-9 on page 545. The back up name is Chapter 14. Click on. Compare your check to the one shown on p. 381. Record the additional payments shown on p. 382.

35. ©The McGraw-Hill Companies, Inc., 2004 35 of 42 Glossary of Terms Chapter 14

36. ©The McGraw-Hill Companies, Inc., 2004 36 of 42 Exemptions, p. 511 These are withholding allowances claimed by the employee. The number of exemptions or withholding allowances usually includes one for the employee, one for the employee’s spouse, and one for each dependent.

37. ©The McGraw-Hill Companies, Inc., 2004 37 of 42 Withholding allowances, p. 511 Exemptions claimed by the employee. The number of exemptions or withholding allowances usually includes one for the employee, one for the employee’s spouse, and one for each dependent.

38. ©The McGraw-Hill Companies, Inc., 2004 38 of 42 FICA taxes, p. 512 This deduction from wages is also called the social security tax and provides qualified workers who retire at age 62 or older with monthly payments from the federal government. A portion of this tax is for Medicare.

39. ©The McGraw-Hill Companies, Inc., 2004 39 of 42 Medicare, p. 512 A portion of FICA taxes (also called social security taxes) deducted from wages of qualified workers. Medical benefits called Medicare are received by retirees after reaching age 65.

40. ©The McGraw-Hill Companies, Inc., 2004 40 of 42 W-2 forms, p. 512 An annual report of an employee’s wages subject to FICA and federal income tax that shows the amounts of these taxes that were withheld.

41. ©The McGraw-Hill Companies, Inc., 2004 41 of 42 Internet Activity, p. 545 1 Go to the book’s website at www.mhhe.com/yacht2003 www.mhhe.com/yacht2003 2 In the “Student Center” list, link to Internet Activities. 3 Link to WEB EXERCISES PART 3. 4 Complete the “SALARY CALCULATOR” exercise. Read steps 1-3. 5 Follow the steps shown on the book’s website to complete this Internet activity. 6 Using a word processing program, write a brief summary of what you find. Include all appropriate website addresses.

42. ©The McGraw-Hill Companies, Inc., 2004 42 of 42 Going to the Net, p. 546 Access the Employer Reporting and Instructions website at www.ssa.gov/employer/ Link to General W-2 Filing Information, then answer these questions. www.ssa.gov/employer/ 1. What are dates that employers must send W-2 information to the Social Security Administration? (Include the dates for both electronic and paper filing.) 2. When must employers give employees their W-2? 3. What two forms do employers send to the Social Security Administration?