1. Payroll Accounting, Taxes and Reports
Chapter 14
Payroll Accounting, Taxes and Reports

2. Payroll Accounts
Separate payroll accounts for each employee are not kept in the general ledger.
Accounts are kept in the general ledger to summarize total earnings and deductions for all employees.
Journal entries are made to record the payment of the payroll and the employer payroll taxes.

3. PAYROLL REGISTER
The column totals provide the debit and credit amounts needed to journalize a payroll. The totals of the earnings regular, earnings overtime, and deductions total columns are not used to journalize payroll.
Lesson 14-1, page 332

4. JOURNALIZING PAYMENT OF A PAYROLL
December 15. Paid cash for semimonthly payroll, $ (total payroll, $3,803.75, less deductions: employee income tax, $273.00; social security tax, $247.26; Medicare tax, $57.07; health insurance premiums, $182.40; U.S. Savings Bonds, $35.00; United Way donations, $20.00). Check No. 312.
Accounts Affected
Salary Expense
Employee Income Tax Payable
Social Security Tax Payable
Medicare Tax Payable
Health Insurance Premiums Payable
U.S. Savings Bond Payable
United Way Donations Payable
Cash
Classification
Expense
Liability
Asset
Change
Increased
Decreased
Entered
Debit side
Credit side
Lesson 14-1, page 334

5. JOURNALIZING PAYMENT OF A PAYROLL4 2 5 3 1 6 7
1. Write the date.
2. Write the title of the account debited.
3. Write the check number.
4. Write the amount debited to Salary Expense.
5. Write the amount credited to Cash.
6. Write the titles of the accounts credited.
7. Write the credit amounts.
Lesson 14-1, page 334

6. Complete 14-1 Work Together and On Your Own

7. Vocabulary
Federal unemployment tax – a federal tax used for state and federal administrative expenses of the unemployment program.
State unemployment tax- a state tax used to pay benefits to unemployed workers.

8. UNEMPLOYMENT TAXABLE EARNINGS2 1 1 3
1. Enter accumulated earnings and total earnings for each employee.
2. Enter unemployment taxable earnings.
3. Total the unemployment taxable earnings column.
Lesson 14-2, page 337

9. UNEMPLOYMENT TAXES        
Calculate Unemployment Taxes—Federal    
Unemployment Federal Federal
Taxable Unemployment Unemployment
Earnings  Tax Rate = Tax
$  0.8% = $1.47
Calculate Unemployment Taxes—State    
Unemployment State State
Taxable Unemployment Unemployment
Earnings  Tax Rate = Tax
$  5.4% = $9.92
Lesson 14-2, page 338

10. JOURNALIZING EMPLOYER PAYROLL TAXES
December 15. Recorded employer payroll taxes expense, $315.72, for the semimonthly pay period ended Dec. 15. Taxes owed are: social security tax, $247.26; Medicare tax, $57.07; federal unemployment tax, $1.47; state unemployment tax, $9.92. Memorandum No. 63.
Accounts Affected
Payroll Taxes Expense
Soc. Security Tax Pay.
Medicare Tax Payable
Unemp. Tax Pay.—Fed.
Unemp. Tax Pay.—State
Classification
Expense
Liability
Change
Increased
Entered
Debit side
Credit side
Payroll Taxes Expense
Social Security Tax Payable
Medicare Tax Payable
normal balance
normal balance
normal balance 
315.72 
57.07 
247.26
Unemployment Tax Payable—Federal
Unemployment Tax Payable—State
normal balance
normal balance  
1.47
9.92
Lesson 14-2, page 339

11. JOURNALIZING EMPLOYER PAYROLL TAXES2 3 4 1 6 5
1. Write the date.
2. Write the expense account debited.
3. Write the memorandum number.
4. Write the debit amount.
5. Write the titles of the liability accounts credited.
6. Write the credit amounts.
Lesson 14-2, page 339

12. Complete 14-2 Work Together and On Your Own

13. EMPLOYER ANNUAL REPORT TO EMPLOYEES OF TAXES WITHHELD
Lesson 14-3, page 341

14. EMPLOYER’S QUARTERLY FEDERAL TAX RETURN
1. Heading
2. Number of Employees 1
3. Total Quarterly Earnings
4. Income Tax Withheld
5. Employee and Employer Social Security and Medicare Taxes 2 3 4
6. Social Security plus Medicare Taxes 5 6
7. Total Taxes 7
8. Total Taxes for Each Month
9. Total Taxes 8 9
Lesson 14-3, page 342

15. PREPARING EMPLOYER’S QUARTERLY FEDERAL TAX RETURN
Calculate Social Security and Medicare Taxes    
Total Earnings  Tax Rate = Tax
Social Security $22,  13% = $2,934.75
Medicare $22, % = $
Calculate Social Security and Medicare Taxes    
Employee Employer
Social Social
Federal Income Security and Security and Federal Tax
Tax Withheld + Medicare Tax + Medicare Tax = Liability
Dec $ $ $ =
Dec $ $ = $873.16
Totals $ = $1,754.82
Lesson 14-3, page 343

16. EMPLOYER ANNUAL REPORTING OF PAYROLL TAXES
Lesson 14-3, page 344

17. Complete 14-3 Work Together and On Your Own

18. Paying withholding and payroll taxes
Frequency and method of payment is determined by the total amount of tax paid each year.
If the total amount paid in the previous 4 quarters is $50,000 or less, a business is classified as a monthly scheduled depositor.
A monthly scheduled depositor must pay the total amount due to an authorized financial institution by the 15th day of the following month with form 8109.

19. Exceptions
1. If less than $500 tax liability is accumulated during a three-month quarter, the deposit may be paid at the end of the month following the end of the quarter.
2. If a tax liability of $100, or more is accumulated on any day, the amount must be deposited on the next banking day.

20. Omni Import’s Classification
Omni is classified as a monthly depositor.
Payroll taxes are deposited with a local authorized financial institution by the 15th day of the following month accompanied by Form 8109.

21. FORM 8109, FEDERAL DEPOSIT COUPON
Lesson 14-4, page 347

22. JOURNALIZING PAYMENT OF LIABILITY FOR EMPLOYEE INCOME TAX, SOCIAL SECURITY TAX, AND MEDICARE TAX
January 15. Paid cash for liability for employee income tax, $542.00; social security tax, $985.40; and Medicare tax, $227.42; total, $1, Check No. 330.
Accounts Affected
Employee Inc. Tax Pay.
Social Security Tax Pay.
Medicare Tax Payable
Cash
Classification
Liability
Asset
Change
Decreased
Entered
Debit side
Credit side
Cash
Medicare Tax Payable
Social Security Tax Payable
Employee Inc. Tax Payable
normal balance
normal balance
normal balance 
542.00 
985.40 
227.42
normal balance
1,754.82 
Lesson 14-4 page 348

23. JOURNALIZING PAYMENT OF LIABILITY FOR EMPLOYEE INCOME TAX, SOCIAL SECURITY TAX, AND MEDICARE TAX1 3 5 4 2
1. Write the date.
2. Write the title of the three accounts debited.
3. Write the check number.
4. Write the three debit amounts.
5. Write the amount of the credit to Cash.
Lesson 14-4, page 348

24. PAYING THE LIABILITY FOR FEDERAL UNEMPLOYMENT TAX
Lesson 14-4, page 349

25. JOURNALIZING PAYMENT OF LIABILITY FOR FEDERAL UNEMPLOYMENT TAX
January 31. Paid cash for federal unemployment tax liability for quarter ended December 31, $8.40. Check No. 343.
Accounts Affected
Unemployment Tax Payable—Federal
Cash
Classification
Liability
Asset
Change
Decreased
Entered
Debit side
Credit side
Unemployment Tax Payable—Federal
Cash
normal balance
normal balance
8.40 
8.40 
Lesson 14-4, page 350

26. JOURNALIZING PAYMENT OF LIABILITY FOR FEDERAL UNEMPLOYMENT TAX1 2 3 4 5
1. Write the date.
2. Write the title of the account debited.
3. Write the check number.
4. Write the debit amount.
5. Write the amount of the credit to Cash.
Lesson 14-4, page 350

27. JOURNALIZING PAYMENT OF LIABILITY FOR STATE UNEMPLOYMENT TAX1 2 3 4 5
1. Write the date.
2. Write the title of the account debited.
3. Write the check number.
4. Write the debit amount.
5. Write the amount of the credit to Cash.
Lesson 14-4, page 350

28. Complete 14-4 Work Together and On Your Own