1. Chapter 13 Accounting Test Review Test is Friday (53 Points)
Study Guide Due By Thursday
Challenge Problem (Extra Credit) Available
Practice Test is Available
Talk to Ames for reposts

6. Transaction 1– Paying the Tax Liability
Paid cash for liability for employee income tax, $460.00; social security tax, $757.90; Medicare tax, $177.25; total, $1, C45.
Goes in cash payments journal
Debit Employee income tax payable $460
Debit Social security tax payable $757.90
Debit Medicare tax payable $177.25
Credit Cash $

7. Transaction 2 – Recording the employees’ semimonthly payroll
Paid cash for semimonthly payroll, $2, (total payroll, $2,971.00, less deductions: employee income tax, $178.00; social security tax, $184.20; Medicare tax, $43.08). C46.
Goes in the cash payments journal
Debit Salary expense $
Credit Employee income tax payable $178.00
Credit Social security tax payable $184.20
Credit Medicare tax payable $43.08
Credit Cash $

8. Transaction 3 – Recording the employer’s payroll tax expense
Recorded employer payroll tax expense for the semimonthly pay period ended April 15. M26.
Goes in the general journal
Debit Payroll tax expense $411.48
Total of all the taxes below
Credit Social security tax payable $184.20
Total earnings/payroll $2971 x .062
Credit Medicare tax payable $43.08
Total earnings/payroll $2971 x .0145
Credit Unemployment tax payable-Federal $23.77
Total earnings/payroll $2971 x .008
Credit Unemployment tax payable-State $160.43
Total earnings/payroll $2971 x .054

9. Transaction 4 – Recording the employer’s payroll tax expense
Goes in the general journal
Debit Payroll tax expense $411.48
Total of all the taxes below
Credit Social security tax payable $184.20
Total earnings/payroll $2971 x .062
Credit Medicare tax payable $43.08
Total earnings/payroll $2971 x .0145
Credit Unemployment tax payable-Federal $23.77
Total earnings/payroll $2971 x .008
Credit Unemployment tax payable-State $160.43
Total earnings/payroll $2971 x .054

10. Transaction 5– Paying the Unemployment Tax Liability
Paid cash for federal unemployment tax liability for quarter ended March 31, $ C47.
Goes in cash payments journal
Debit Unemployment tax payable-Federal $121.60
Credit Cash $121.60

11. Transaction 6– Paying the Unemployment Tax Liability
Paid cash for state unemployment tax liability for quarter ended March 31, $ C48.
Goes in cash payments journal
Debit Unemployment tax payable-State $818.10
Credit Cash $818.10

15. Unemployment-Federal
Tax
Employee
Employer
Employee Income Tax X
Social Security
Medicare
Unemployment-Federal
Unemployment-State

16. Employee Taxes
Employees have Federal Income, Social Security, and Medicare taxes removed from their checks
Tax amounts are based on a percentage of gross pay
Payroll register and employee earnings records provide the information needed

17. Employer Payroll Taxes
Business expenses for the company
Employers must pay Social Security, Medicare and Federal and State Unemployment taxes
Based on a percentage of employee earnings
Employers pay the same percentage of Social Security and Medicare as employees
Employers are not required to pay unemployment taxes after the first $7,000 earned
If an employee’s accumulated earnings are $6,500, the employer is only subject to the next $500 of employee earnings.

18. Journalizing Employee Taxes
To journalize the employee taxes (cash payments journal):
Paid cash for semimonthly payroll, $2, (total payroll, $2,971.00, less deductions: employee income tax, $178.00; social security tax, $184.20; Medicare tax, $43.08).
Debit to Salary Expense (using the total of the gross pay column of the payroll register)
Salary Expense $2,971.00
Credit to employee income tax payable, social security tax payable, medicare tax payable and cash (total net pay)
Employee Income Tax Payable $178.00
Social Security Tax Payable $184.20
Medicare Tax Payable $43.08
Cash $2,565.72
The source document for payment of payroll is a check

19. Journalizing Employer Taxes
To journalize the employer taxes (general journal):
Recorded employer payroll tax expense for the semimonthly pay period ended April 15. M26.
Paid cash for semimonthly payroll, $2, (total payroll, $2,971.00, less deductions: employee income tax, $178.00; social security tax, $184.20; Medicare tax, $43.08).
Total earning $2,971.00
The Employer payroll tax expense is journalized on the same date as the employee salary expenses
Credit to social security tax payable, medicare tax payable and federal and state unemployment payable
Social security Tax Payable $184.20
Medicare Tax Payable $43.08
Unemployment Tax Payable-Federal $23.77
Unemployment Tax Payable-State $160.43
All of the tax payables are liabilities
Debit to Payroll Tax Expense (total of all of the credits)
Payroll Tax Expense $411.48
The source document for journalizing employer payroll taxes is a memo

20. Payment of Taxes
Employee Income, Social Security and Medicare taxes are paid periodically to the federal government in a combined payment
Some employers must pay on the next banking day, others end of the month or semiweekly
Some use the Electronic Federal Tax Payment System (EFTPS)….not required
Paid cash for liability for employee income tax, $460.00; social security tax, $757.90; Medicare tax, $177.25; total, $1, C45.
Debit Tax Payables
Employee Income Tax Payable $460.00
Social Security Tax Payable $757.90
Medicare Tax Payable $177.25
Credit Cash
Cash $1,395.15

21. Payment of Unemployment Tax
Unemployment tax payment
Paid quarterly
Paid cash for federal unemployment tax liability for quarter ended March 31, $ C47.
Debit to state or federal unemployment tax payable
Unemployment Tax Payable-Federal $121.20
Credit to cash
Cash $121.20
Source document for paying state/federal unemployment tax is a check

22. Other Concepts
Each employer is required by law to periodically report the payroll taxes withheld from employee salaries
Each employer who withholds income tax and social security and Medicare tax from employee salaries must furnish each employee with an annual statement
The annual statement of earnings and withholdings must be provided to the employee by January 31 of the following year
The federal tax used for state and federal administrative expenses of the unemployment program is federal income tax