1. Unit 3 Accounting for a Payroll System
Chapter 12 Payroll Accounting
Chapter 13 Payroll Liabilities and Tax Records
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2. Chapter 13 Payroll Liabilities and Tax Records
What You’ll Learn
Record payroll transactions in the general journal.
Describe the employer’s payroll taxes.
Compute and complete payroll tax expense forms.
Record the payment of tax liabilities in the general journal.
Complete payroll tax reports.
Define the accounting terms introduced in this chapter.
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3. Chapter 13, Section 1 Journalizing and Posting the Payroll
What Do You Think?
After calculations for payroll have been completed, how are these amounts transferred to the accounting records?
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4. Journalizing and Posting the Payroll
SECTION 13.1
Main Idea
The release of cash for payroll is a transaction. It must be journalized and posted.
You Will Learn
how to analyze and journalize the payroll transaction.
how to post the payroll transaction.
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5. Journalizing and Posting the Payroll
SECTION 13.1
Key Term
Salaries Expense
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6. Journalizing and Posting the Payroll
SECTION 13.1
Analyzing and Journalizing the Payroll
After payroll checks are written, the payment must be recorded in the accounting records. Employee earnings are an operating expense and are often recorded in the Salaries Expense account.
There are various deductions withheld by the employer but not immediately paid. These amounts are business liabilities and are recorded in separate accounts.
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7. Journalizing and Posting the Payroll
SECTION 13.1
Analyzing and Journalizing the Payroll
Each type of payroll liability is recorded in a separate account.
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8. Journalizing and Posting the Payroll
SECTION 13.1
Posting the Payroll Entry
An example follows of the general journal entry and the individual ledger accounts after posting.
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9. Journalizing and Posting the Payroll
SECTION 13.1
Journalizing and Posting the Payroll
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10. Journalizing and Posting the Payroll
SECTION 13.1
Journalizing and Posting the Payroll
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11. Journalizing and Posting the Payroll
SECTION 13.1
Journalizing and Posting the Payroll
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12. Journalizing and Posting the Payroll
SECTION 13.1
Key Term Review
Salaries Expense
The expense account used to record employees’ earnings.
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13. Chapter 13, Section 2 Employer’s Payroll Taxes
What Do You Think?
Who shares the earnings tax burden with employees?
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14. Employer’s Payroll Taxes
SECTION 13.2
Main Idea
Employers must pay taxes in addition to the amounts withheld from their employees. This is an expense for the business.
You Will Learn
how to compute payroll tax expense.
how to journalize payroll tax expense.
how to post payroll tax expense.
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15. Employer’s Payroll Taxes
SECTION 13.2
Key Terms
Federal Unemployment Tax Act (FUTA)
State Unemployment Tax Act (SUTA)
unemployment taxes
Payroll Tax Expense
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16. Employer’s Payroll Taxes
SECTION 13.2
Computing Payroll Tax Expenses
An employer must pay taxes on employees’ wages. These taxes include:
the employer’s FICA taxes
the federal unemployment tax
the state unemployment tax
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17. Employer’s Payroll Taxes
SECTION 13.2
The Employer’s FICA Taxes
Both the employee and the employer pay FICA taxes. The current rates are 6.2% for social security tax and 1.45% for Medicare tax. The employee and employer pay these taxes whether the employee is full-time, part-time, temporary, or permanent.
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18. Employer’s Payroll Taxes
SECTION 13.2
Federal and State Unemployment Taxes
There are two unemployment laws that require employers to pay unemployment taxes:
the Federal Unemployment Tax Act (FUTA)
the State Unemployment Tax Act (SUTA)
Employees are required to pay unemployment taxes in some states.
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19. Employer’s Payroll Taxes
SECTION 13.2
Journalizing the Employer Payroll Taxes
The payroll taxes are recorded as business expenses in the Payroll Tax Expense account.
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20. Employer’s Payroll Taxes
SECTION 13.2
Journalizing the Employer Payroll Taxes
The payroll taxes are recorded as business expenses in the Payroll Tax Expense account.
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21. Employer’s Payroll Taxes
SECTION 13.2
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22. Employer’s Payroll Taxes
SECTION 13.2
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23. Employer’s Payroll Taxes
SECTION 13.2
Posting Payroll Taxes to the General Ledger
This is an example of the individual ledger accounts after posting.
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24. Employer’s Payroll Taxes
SECTION 13.2
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25. Employer’s Payroll Taxes
SECTION 13.2
Key Terms Review
Federal Unemployment Tax Act (FUTA)
Law that requires employers to pay unemployment taxes to the federal government.
State Unemployment Tax Act (SUTA)
Law that requires employers to pay employment taxes to individual states.
unemployment taxes
Taxes collected to provide funds for workers who are temporarily out of work; usually paid only by the employer (FUTA and SUTA).
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26. Employer’s Payroll Taxes
SECTION 13.2
Key Terms Review
Payroll Tax Expense
The expense account used to record the employer’s payroll taxes (FICA, FUTA, SUTA).
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27. Chapter 13, Section 3 Tax Liability Payments and Tax Reports
What Do You Think?
Why are companies not permitted to keep the money they withhold from employee payroll checks?
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28. Tax Liability Payments and Tax Reports
SECTION 13.3
Main Idea
Employers make tax deposits and send payroll reports to the government.
You Will Learn
how employers send payroll tax payments to the government.
how employers report payroll information to the government.
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29. Tax Liability Payments and Tax Reports
SECTION 13.3
Key Terms
Form 8109
Electronic Federal Tax Payment System (EFTPS)
Form W-2
Form W-3
Form 941
Form 940
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30. Tax Liability Payments and Tax Reports
SECTION 13.3
Paying the Payroll Tax Liabilities
Payroll liabilities are paid at regular intervals.
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31. Tax Liability Payments and Tax Reports
SECTION 13.3
FICA and Federal Income Taxes
A business makes a payment combining social security and Medicare taxes and employees’ federal taxes withheld. Form 8109 is sent with the payment to an authorized financial institution or Federal Reserve Bank.
The Electronic Federal Tax Payment System (EFTPS) is used by larger businesses to make deposits.
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32. Tax Liability Payments and Tax Reports
SECTION 13.3
FICA and Federal Income Taxes
Businesses pay FICA and federal income taxes withheld at regular intervals.
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33. Tax Liability Payments and Tax Reports
SECTION 13.3
FICA and Federal Income Taxes
Businesses pay FICA and federal income taxes withheld at regular intervals.
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34. Tax Liability Payments and Tax Reports
SECTION 13.3
FICA and Federal Income Taxes
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35. Tax Liability Payments and Tax Reports
SECTION 13.3
FICA and Federal Income Taxes
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36. Tax Liability Payments and Tax Reports
SECTION 13.3
State and Local Income Taxes
Businesses pay state and local income taxes withheld at regular intervals.
Glencoe Accounting Unit 3 Chapter 13 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.

37. Tax Liability Payments and Tax Reports
SECTION 13.3
State and Local Income Taxes
Businesses pay state and local income taxes withheld at regular intervals.
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38. Tax Liability Payments and Tax Reports
SECTION 13.3
State and Local Income Taxes
Businesses pay state and local income taxes withheld at regular intervals.
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39. Tax Liability Payments and Tax Reports
SECTION 13.3
State and Local Income Taxes
Businesses pay state and local income taxes withheld at regular intervals.
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40. Tax Liability Payments and Tax Reports
SECTION 13.3
Federal Unemployment Taxes
Most businesses pay the FUTA tax quarterly, unless it is less then $100 and only an annual payment is needed.
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41. Tax Liability Payments and Tax Reports
SECTION 13.3
Federal Unemployment Taxes
Most businesses pay the FUTA tax quarterly, unless it is less then $100 and only an annual payment is needed.
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42. Tax Liability Payments and Tax Reports
SECTION 13.3
Federal Unemployment Taxes
Most businesses pay the FUTA tax quarterly, unless it is less then $100 and only an annual payment is needed.
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43. Tax Liability Payments and Tax Reports
SECTION 13.3
Federal Unemployment Taxes
Most businesses pay the FUTA tax quarterly, unless it is less then $100 and only an annual payment is needed.
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44. Tax Liability Payments and Tax Reports
SECTION 13.3
State Unemployment Taxes
State unemployment taxes are usually paid quarterly.
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45. Tax Liability Payments and Tax Reports
SECTION 13.3
State Unemployment Taxes
State unemployment taxes are usually paid quarterly.
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46. Tax Liability Payments and Tax Reports
SECTION 13.3
State Unemployment Taxes
State unemployment taxes are usually paid quarterly.
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47. Tax Liability Payments and Tax Reports
SECTION 13.3
State Unemployment Taxes
State unemployment taxes are usually paid quarterly.
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48. Tax Liability Payments and Tax Reports
SECTION 13.3
Other Payroll Liabilities
Payments for voluntary deductions are also made.
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49. Tax Liability Payments and Tax Reports
SECTION 13.3
Other Payroll Liabilities
Payments for voluntary deductions are also made.
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50. Tax Liability Payments and Tax Reports
SECTION 13.3
Other Payroll Liabilities
Payments for voluntary deductions are also made.
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51. Tax Liability Payments and Tax Reports
SECTION 13.3
Other Payroll Liabilities
Payments for voluntary deductions are also made.
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52. Tax Liability Payments and Tax Reports
SECTION 13.3
Posting the Payment of Payroll Liabilities
This is an example of the individual ledger accounts after posting.
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53. Tax Liability Payments and Tax Reports
SECTION 13.3
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54. Tax Liability Payments and Tax Reports
SECTION 13.3
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55. Tax Liability Payments and Tax Reports
SECTION 13.3
Preparing Payroll Tax Forms
Employers complete a variety of payroll-related tax forms.
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56. Tax Liability Payments and Tax Reports
SECTION 13.3
Forms W-2 and W-3
Form W-2 is the Wage and Tax Statement and summarizes an employee’s earnings and withholdings for the calendar year. Form W-3 is the Transmittal of Wage and Tax Statements and summarizes the information from Forms W-2.
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57. Tax Liability Payments and Tax Reports
SECTION 13.3
Form W-2
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58. Tax Liability Payments and Tax Reports
SECTION 13.3
Form W-3
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59. Tax Liability Payments and Tax Reports
SECTION 13.3
Forms 941 and 940
Form 941 is the employer’s quarterly federal tax return and reports accumulated amounts of FICA and federal income taxes withheld from employees’ earnings and FICA taxes owed by the employer.
Form 940 is used to report the employer’s federal unemployment tax.
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60. Tax Liability Payments and Tax Reports
SECTION 13.3
Key Terms Review
Form 8109
Federal Deposit Tax Coupon; form sent with payment for FICA and federal income taxes or federal unemployment taxes.
Electronic Federal Tax Payment System (EFTPS)
System used by large businesses to deposit tax payments by electronic funds transfer.
Form W-2
Wage and Tax Statement; form that summarizes an employee’s earnings and amounts withheld for federal, state, and local taxes.
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61. Tax Liability Payments and Tax Reports
SECTION 13.3
Key Terms Review
Form W-3
Transmittal of Wage and Tax Statements; summarizes the information contained on the employees’ Forms W-2 and accompanies the Forms W-2 sent to the federal government.
Form 941
Employer’s Quarterly Federal Tax Return; form used to report accumulated amounts of FICA and federal income tax withheld from employees’ earnings for the quarter, as well as FICA tax owed by the employer.
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62. Tax Liability Payments and Tax Reports
SECTION 13.3
Key Terms Review
Form 940
Form that reports the employer’s federal unemployment taxes.
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63. Chapter 13 Review Question 1
Mandy’s Dance Studio had a payroll that had $2, in gross pay. Calculate the employer’s payroll taxes (assume that no employee has reached the maximum for social security deductions or for state or federal unemployment tax).
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64. Chapter 13 Review
CHAPTER 13
Answer 1
Step 1: Calculate the social security tax by multiplying gross wages by 6.2 percent ($2,  .062 = $159.08).
Step 2: Calculate the Medicare tax by multiplying gross wages by 1.45 percent ($2,  = $37.20).
Step 3: Calculate the state unemployment tax by multiplying gross wages by 5.4 percent ($2,  .054 = $138.55).
Step 4: Calculate the federal unemployment tax by multiplying gross wages by 0.8 percent ($2,  .008 = $20.53)
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65. Chapter 13 Review Question 2
Which payroll-related forms discussed in the chapter must a business file with the government?
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66. Chapter 13 Review Answer 2 W-2 Wage and Tax Statement
W-3 Transmittal of Wage and Tax Statements
941 Employer’s Quarterly Federal Tax Return
940 Employer’s Annual Federal Unemployment (FUTA) Tax Return
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67. Resources Glencoe Accounting Online Learning Center English Glossary
Spanish Glossary
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