1. Recording A Payroll
LESSON 13-1

2. PAYROLL REGISTER Salary Expense Debited Liabilities Credited Cash
page 369
Salary Expense
Debited
Liabilities
Credited
Cash
Credited
Until payroll is recorded in the journal and then posted to the ledger accounts, the accounts are not up to date.

3. ANALYZING PAYMENT OF A PAYROLL
page 370
Deductions
Total Earnings
Net Pay

4. JOURNALIZING PAYMENT OF A PAYROLL
page 371
December 15. Paid cash for payroll, $4, Check No. 335.

5. Audit Your Understanding
What account title is used journalize the total earnings column of the payroll register?
Salary Expense
What account title is used to journalize the federal income tax column of the payroll register?
Employee Income Tax Payable

6. Audit Your Understanding
What account title is used to journalize a Social Security tax column in the payroll register?
Social Security Tax Payable

7. Work Together
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8. 13-2 New 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

9. UNEMPLOYMENT TAXABLE EARNINGS
page 374
First:
Determine if the tax base has been met. 2 1 3
1. Enter accumulated earnings and total earnings for each employee.
2. Enter any unemployment taxable earnings.
3. Total the Unemployment Taxable Earnings column.

10. UNEMPLOYMENT TAXES 2 Taxes Federal Unemployment Tax =
page 375
Federal Unemployment Tax =
Federal Unemployment Tax Rate ×
Unemployment Taxable Earnings
$790.00 ×
0.8% =
$6.32
State Unemployment Tax =
State Unemployment Tax Rate ×
Unemployment Taxable Earnings
$790.00 ×
5.4% =
$42.66

11. JOURNALIZING EMPLOYER PAYROLL TAXES
page 376
(continued on next slide)
December 15. Recorded employer payroll taxes expense, $485.92, for the semimonthly pay period ended December 15. Taxes owed are: social security tax, $354.11; Medicare tax, $82.83; federal unemployment tax, $6.32; state employment tax, $ Memorandum No. 63.

12. JOURNALIZING EMPLOYER PAYROLL TAXES
page 376
(continued from previous slide)

13. Audit Your Understanding
What is the tax rate Hobby Shack must pay on employees for each of the following taxes: Social Security, Medicare, federal unemployment, and state unemployment?
Social Security: 6.2% of earnings up to a maximum of $87,000 in each calendar year;
Medicare: 1.45% of total employee earnings;
Federal unemployment: 0.8% on the first $7,000 earned by each employee;
State unemployment: 5.4% on the first $7,000 earned by each employee

14. Audit Your Understanding
What is the amount of each employee’s total earnings that are subject to federal and state unemployment taxes at Hobby Shack?
Only the first $7,000 each employee earns

15. Work Together
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16. 13-3 EMPLOYER ANNUAL REPORT TO EMPLOYEES OF TAXES WITHHELD
page 378

17. EMPLOYER’S QUARTERLY FEDERAL TAX RETURN
page 379
(continued on next slide) 1 2
1. Heading
2. Number of employees

18. EMPLOYER’S QUARTERLY FEDERAL TAX RETURN
page 379
(continued on next slide) 3 4 5 6 7
3. Total quarterly earnings
6. Social security plus Medicare taxes
4. Income tax withheld
5. Employee and employer social security and Medicare taxes
7. Total taxes

19. EMPLOYER’S QUARTERLY FEDERAL TAX RETURN
page 379
(continued from previous slide) 9 8
8. Total taxes for each month
9. Total taxes

20. EMPLOYER ANNUAL REPORTING OF PAYROLL TAXES
page 381

21. Audit Your Understanding
When must employers provide a W–2 statement to their employees?
By January 31
What taxes are included in the quarterly federal tax return filed by the employer?
Federal income tax, Social Security tax, and Medicare tax

22. Work Together
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23. LESSON 13-4 New Vocabulary
Lookback Period: The 12-month period that ends on June 30 of the prior year
(Helps to determine when payroll taxes are due to the government.)

24. PAYING THE LIABILITY FOR EMPLOYEE INCOME TAX, SOCIAL SECURITY TAX, AND MEDICARE TAX
page 383

25. FORM 8109, FEDERAL DEPOSIT COUPON
page 384

26. JOURNALIZING PAYMENT OF LIABILITY FOR EMPLOYEE INCOME TAX, SOCIAL SECURITY TAX, AND MEDICARE TAX
page 385
January 15. Paid cash for liability for employee income tax, $757.00; social security tax, $1,451.38; and Medicare tax, $339.42; total, $2, Check No. 347.

27. PAYING THE LIABILITY FOR FEDERAL UNEMPLOYMENT TAX
page 386

28. JOURNALIZING PAYMENT OF LIABILITY FOR FEDERAL UNEMPLOYMENT TAX
page 387
January 31. Paid cash for federal unemployment tax liability for quarter ended December 31, $ Check No. 367. 1 2 3 4 5

29. JOURNALIZING PAYMENT OF LIABILITY FOR STATE UNEMPLOYMENT TAX
page 387
January 31. Paid cash for state unemployment tax liability for quarter ended December 31, $ Check No. 368.

30. Work Together
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31. IQ Test (for Professionals)
How do you put a giraffe into a refrigerator?
Open the refrigerator door, put the giraffe in, and close the door.
This question tests whether or not you do simple things in a complicated way.

32. IQ Test How do you put an elephant into a refrigerator?
Open the refrigerator door, take the giraffe out, put the elephant in, and close the door.
This question tests your prudence and practicality.

33. IQ Test
The Lion King is hosting an animal conference. All animals except one attend. Which one does not attend?
The elephant. The elephant is still in the refrigerator.
This question tests whether or not you have comprehensive thinking skills.

34. IQ Test
If you did not answer the first three questions correctly, this next question is your last chance to show your qualifications as a professional.

35. IQ Test
There is a river inhabited by crocodiles. How do you manage to get to the other side?
Swim through it. All of the animals, including the crocodiles, are attending the animal conference. (Except for the elephant, of course.)

36. IQ Test
Don’t be frustrated if you failed this test. According to Anderson Consulting Worldwide, about 90% of the professionals failed the test.
However, many preschoolers got it correct, thus disproving the popular theory that most “professionals” have the brains of a four-year old.

37. The End