1. Payroll Liabilities and Tax Records
Chapter 13 $
Payroll Liabilities and Tax Records $
Making Accounting Relevant
Federal, state, and local governments pass tax laws in order to generate revenue for government services. $ $
Can you name some uses for your tax dollars?

2. $ $ $ $ Section 1 Journalizing and Posting the Payroll
Chapter 13 $
Section 1 Journalizing and Posting the Payroll $
What You’ll Learn
How to compute the business payroll deductions.
How to record the payroll entry in the general journal. $ $

3. $ $ $ $ Why It’s Important Key Term Chapter 13 Salaries Expense
Section 1 Journalizing and Posting the Payroll (con’t.)
Chapter 13 $
Why It’s Important
Payroll deductions are liabilities of the business. It is essential that payroll deductions are journalized and posted in a timely manner. $ $ $
Key Term
Salaries Expense

4. $ $ $ $ Analyzing the Payroll Transaction Chapter 13
Section 1 Journalizing and Posting the Payroll (con’t.)
Chapter 13 $
Analyzing the Payroll Transaction
Employee earnings are a normal operating expense of a business.
Various deductions, such as income and FICA taxes, are withheld from gross earnings each pay period.
Net pay is the amount actually paid out in cash by the employer to the employees. $ $ $

5. Section 1 Journalizing and Posting the Payroll (con’t.)
Chapter 13 $
Analyzing the Payroll Transaction con’t.
The employee retains the amounts withheld until it is time to pay the appropriate government agencies and businesses.
The amount withheld but not yet paid are liabilities of the business. $ $
Type of Deduction
Ledger Account
Federal income tax
Employees’ Federal Income Tax Payable
Medicare tax
Medicare Tax Payable
Hospital insurance premiums
Hospital Insurance Premiums Payable $

6. Amount actually paid out in cash by the employer to the employees.
Section 1 Journalizing and Posting the Payroll (con’t.)
Chapter 13 $
Journalizing the Payroll $
JOURNAL ENTRY $ $
Amount actually paid out in cash by the employer to the employees.

7. Demonstration Problem 13-1

8. 18
200-
May 16
Salaries Expense
Employees’ Federal Income Tax Payable
793.--
Employees’ State Income Tax Payable
99.11
Social Security Tax Payable
307.23
Medicare Tax Payable
71.85
Hospital Insurance Premiums Payable
114.50
Union Dues Payable
140.--
Cash in Bank (Net Pay)
Payroll Register 5/16 ck #345

9. Assignment $ $ $ $ Chapter 13
Section 1 Journalizing and Posting the Payroll
Chapter 13 $ $
Assignment $ $

10. $ $ $ $ Thinking Critically 1&2 Computing in the Business World
Section 1 Journalizing and Posting the Payroll (con’t.)
Chapter 13 $
Check Your Understanding p321 $
Thinking Critically 1&2
Computing in the Business World
Problem 13-1 $ $