1. Chapter 13 Payroll Taxes – Journalizng, Reporting and Paying

2. So… EVERY PAY PERIOD: – Pay employees every pay period Payroll Register Employee Earnings Record – Use Memorandum to journalize employer payroll taxes (contributions) General Journal MONTHLY: – Pay employee and employers contributions electronically (formerly Federal Deposit Coupon) Use Cash Payment Journal QUARTERLY: – Report employee and employers payroll taxes using a 941 form ANNUALLY: – Send a W-3 Transmittal to the Federal government – Send a NJ W-3 Transmittal to the State government – Send W-2s to your employees

3. 13-1: Journalizing Where? Cash payment special journal – Check number of payroll transfer Salaries Expense Debit - Total Earnings Withholding Payables Credits – Each payroll tax Cash Credit – Net amount of check Use T accounts (Text p. 370) WT 13-1, OYO 13-1, App 13-1

4. 13-2: Employer Contributions Payroll Register shows EMPLOYEE contributions EMPLOYER contributions must be made: – Social Security – 6.2% with a maximum of $87,000 – Medicare – 1.45% – Federal Unemployment Tax (FUTA) – 0.8% max of $7,000 – State Unemployment Tax (SUTA) – 5.4% max of $7,000

5. 13-2: Employer Contributions HOBBY SHACK Taxable Earnings For December 15, 2013, Pay Period EmployeeAccumulated Earnings as of Nov 30, 2013 Total Earnings for Dec. 15, 2013 Pay Period Unemployment Taxable Earnings (Max $7,000) Social Security Taxable Earnings (Max $87,000) Aranda, Susan A.21,115.00968.00--968.00 Drew, Paul S.5,595.25550.00 Kellogg, Janice P.39,840.001,910.00--1,910.00 Mendel, Ann M2,030.00240.00 Selby, Rick E22,746.001,137.00--1,137.00 Young, Justin L.19,816.00906.40--906.40 TOTALS5,711.40790.005,711.40 Social Security Tax Payable, 6.2%___________354.11_ Medicare Tax Payable, 1.45%____________82.83__ Unemployment Tax Payable – Federal, 0.8%_____________6.32__ Unemployment Tax Payable – State, 5.4%____________42.66__ Total Payroll Taxes (Employer Contributions)____________485.91_

6. Practice: WT 13-2 13-2 Yer Contributions\13-2 WT Yer Contributions.xls 13-2 Yer Contributions\13-2 WT Yer Contributions.xls Complete OYO 13-2 – Employer Payroll Tax Chart

7. 13-2: Employer Contributions Journalized each payroll period as a payable – Not paid til quarter or year end – Use Memorandum GENERAL JOURNALPage12 DateACCOUNT TITLEDOC NO. POST REF. DEBITCREDIT 9 15 Payroll Taxes ExpenseM63485.92 9 10 Social Security Tax Payable354.11 10 11 Medicare Tax Payable82.83 11 12 Unemployment Tax Payable - Federal6.32 12 13 Unemployment Tax Payable – State42.66 13 14 15

8. Practice 13-2 WT 13-2 Yer Contributions\13-2 WT Yer Contributions.xls 13-2 Yer Contributions\13-2 WT Yer Contributions.xls Complete 13-2 OYO PUT IT ALL TOGETHER: Application Problem 13-2

9. 13-3: The W-2 Employer Annual Report to Employees of Taxes Withheld At year end, prepare a W-2 (Text p. 378) – Submitted to: Federal and State governments, employee, and filed in company files Business’s name, address and EIN Employee’s name, address and SS # Total Wages (Box 1, 3 and 5) Total Fed income tax withheld (Box 2) Total SS withheld (Box 4) Total Medicare withheld (Box 6) Employees use this W-2 to file their personal income taxes.

10. 13-3: The W-3 Employer Annual Reporting of Payroll Taxes At year end, prepare a W-3 (Text p. 381) – Submitted to: Federal and State governments, and filed in company files Business’s name, address and EIN Employee’s name, address and SS # Total Wages for the Business (Box 1, 3 and 5) Total Fed income tax withheld for the Business (Box 2) Total SS withheld for the Business (Box 4) Total Medicare withheld for the Business (Box 6) The total of all employees’ W-2s

11. 13-3: The 941 – Employer’s Quarterly Federal Tax Return (Text p. 379) Filed the month following each fiscal quarter – Due April 30 th, July 30 th, Oct 30 th, Jan 30 th – Reports the amount of employees’ withholding plus employer contributions that is owed and has been paid Form 941 at irs.gov publications Practice: 13-3 Work Together With a partner: 13-3 OYO Independently: 13-3 App

12. 13-4: Form 8109, Federal Deposit Coupon Coupons are no longer in use File electronically - MONTHLY Once payment is filed, need to journalize Debit: Employee Income Tax Payable Social Security Tax Payable Medicare Tax Payable Credit: Cash w/ check number paid for employee and employer taxes

13. So… EVERY PAY PERIOD: – Pay employees every pay period Payroll Register Employee Earnings Record – Use Memorandum to journalize employer payroll taxes (contributions) General Journal MONTHLY: – Pay employee and employers contributions electronically (formerly Federal Deposit Coupon) Use Cash Payment Journal QUARTERLY: – Report employee and employers payroll taxes using a 941 form ANNUALLY: – Send a W-3 Transmittal to the Federal government – Send a NJ W-3 Transmittal to the State government – Send W-2s to your employees