2. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. EMPLOYER TAXES, PAYMENTS, AND REPORTS Chapter 8

3. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Everyone must have a ___________________ or an ___________________ (______). Employers of one or more persons are required to have an _____________________ (_____), and it must be listed on all reports and payments of employees’ federal income tax withholding and FICA taxes. Employer Identification Number (EIN)

4. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. An employer’s payroll taxes are based on the _________ wages paid to employees. Payroll taxes are an _________ of doing business A company would ______ ______________________ for the _________ portion of FICA taxes and for _________ and _________ unemployment taxes. Employer’s Payroll Taxes

5. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. FICA tax is imposed equally on both _________ and _________. The employer’s share is determined by _________ the _________ tax rate by the _________ earnings. The accountant obtains the Social Security and Medicare taxable earnings amounts from the payroll register. Employer’s Matching Portion of FICA Tax

6. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The proceeds of the __________________________ (______), which is levied only on the employer in most states, are used to pay subsistence benefits to unemployed workers. Green Sales Company is subject to a rate of 5.4 percent of the first $7,000 of each employee’s earnings; in our example, $958.20 of earnings are subject to this tax. Employer’s State Unemployment Tax

7. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Learning Objective

8. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The _____________________ (______) is paid only by the _________________. Green Sales Company is subject to a rate of 6% of the first $________ of each ________ earnings (the same amount of earnings that is used for SUTA). Employer’s Federal Unemployment Tax

9. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Steps for Recording the Payroll

10. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Steps for Recording the Payroll

11. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

13. Practice Exercise 1

14. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

15. Learning Objective

16. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Payments of FICA Tax and Employees’ Federal Income Tax Withholding A federal tax deposit includes the combined total of three items: __________________________________ The IRS requires all tax deposits to be made _________, using the _____________________ __________________ (_______).

17. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Payments of FICA Tax and Employees’ Federal Income Tax Withholding Employers submit a return, ________, every ______ (____ consecutive months). The due dates for filing this return are as follows:

18. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Federal Tax Deposit From the October 11 payroll for Green Sales Company, we determine the following taxes are owed:

19. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Federal Tax Deposit The October 18 payroll for Green Sales Company has the same taxes as the October 11 payroll. The combined taxes for the two weeks would be:

20. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. General Journal entry for two week’s taxes

21. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Practice Exercise 2

22. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

23. Learning Objective

24. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Payments of State Unemployment Insurance The state tax is usually paid ______ and is due by the end of the ______ following the end of the ______ (the same due dates for Form 941).

25. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Payments of State Unemployment Insurance Green Sales Company makes the journal entry for the first quarter (covering the months of January, February, and March). The taxable amount for this quarter was $70,325, so the tax is $3,797.55 ($70,325 x 0.054).

26. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The FUTA tax is calculated ________, during the ________ following the end of each calendar ________. If the accumulated tax liability is greater than $ ________, the tax is deposited in a financial institution, accompanied by a preprinted federal tax deposit card. The due date for this deposit is the ________ of the ________ following the end of the ________. Payments of Federal Unemployment Insurance

27. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Recall that at the end of the first quarter, Green Sales Company had $70,325 that was taxable. The amount of the tax was $421.95 ($70,325 x 0.006). Payments of Federal Unemployment Insurance

28. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Practice Exercise 3

29. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

30. Learning Objective

31. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Deposits of Employees’ State Income Tax Withholding

32. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Practice Exercise 4

33. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Learning Objective

34. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The purpose of ___________, Employer’s Quarterly Federal Tax Return, is to report the tax ________ for withholdings of employees’ ________ income tax and ________ taxes, and also the ________ share of FICA taxes. Employer’s Quarterly Federal Tax Return (Form 941)

35. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Practice Exercise 5

36. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Learning Objective

37. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. After the __________ (__________ ) and by the __________, the __________ must furnish for each employee a Wage and Tax Statement, known as ______________. The source of the information used to complete Form W-2 is the __________ __________ __________ record. Wage Withholding Statements for Employees (Form W-2)

38. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. _______________, Transmittal of Wage and Tax Statements, is sent with the accompanying Copy A of the employees’ W-2 form to the _________________ administration. This form is due on _______________, following the end of the calendar year. The amounts shown on __________ must be the same as the grand totals of the __________ and the ________________________. Employer’s Annual Federal Income Tax Reports (Form W-3)

39. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Generally all _____________ are subject to the Federal Unemployment Tax Act. These employers must submit an Employer’s Annual Federal Unemployment (FUTA) Tax Return, ________________, _____________ following the close of the calendar year. This deadline may be extended until _____________ if the employer has made deposits paying the FUTA _____________. Reports and Payments of Federal Unemployment Tax

40. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Using Green Sales Company as our example, federal unemployment taxable earnings by quarter are as follows: Reports and Payments of Federal Unemployment Tax

41. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. On April 30, we now repeat the journal entry for the first quarter on Green Sales Company’s books. Reports and Payments of Federal Unemployment Tax

42. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Practice Exercise 6

43. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Learning Objective

44. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Most states require employers to provide __________ ______________ either through plans administered by the state or through private insurance companies authorized by the state. This insurance provides ______________ insurance for employees _____ or _____ on the job. Generally, the employer pays a _____ in _____, based on the _____ payroll. Workers’ Compensation Insurance

45. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Workers’ Compensation Insurance For Green Sales company, at the beginning of the year, the firm’s accountant computed the estimated premium as follows:

46. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Workers’ Compensation Insurance For Green Sales company, at the end of the year, the firm’s accountant calculated the exact premium as follows:

47. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Practice Exercise

48. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

49. Learning Objective

50. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The accountant determines the amount of the adjustment is $73.19 [$3,646.19 (total exact premium) – $3,573.00 (total estimated premium paid)]. The accountant then makes an additional adjusting entry for the extra premium. Workers’ Compensation Insurance

51. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Learning Objective

52. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Assume that $2,400 of wages accrued for the time between the last payday and the end of the year. An adjusting entry is necessary. Adjusting for Accrued Salaries and Wages

53. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The following taxes come under the umbrella of the ___________________ account: ________________________________ The employer becomes liable for these taxes ____ when the employees are ____________. Adjusting Entry for Accrual of Payroll Taxes

54. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Types of Payroll Fraud _________________________________________ _________________________________________

55. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Internal Controls to Prevent and Detect Payroll Fraud ________________________ ________________________ ________________________ ________________________ ________________________ ________________________ ________________________ ________________________ ________________________ ________________________ ________________________ ________________________ ________________________ ________________________ ________________________ ________________________ ________________________ ________________________ ________________________ ________________________ ________________________ ________________________

56. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Practice Exercise 8

57. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.