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Chapter 14: Payroll

Chapter 14: Payroll. Payroll. Employees and employers are required to pay local, state, and federal payroll taxes. Employers must withhold taxes from each employee’s paycheck. The amount withheld for federal taxes is determined from tax tables published by the IRS.

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Chapter 14: Payroll

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  1. Chapter 14: Payroll

  2. Payroll • Employees and employers are required to pay local, state, and federal payroll taxes. Employers must withhold taxes from each employee’s paycheck. The amount withheld for federal taxes is determined from tax tables published by the IRS. • The amount withheld depends on the employee’s earnings and the number of exemptions or withholding allowances claimed by the employee. FICA taxes and Medicare taxes are also deducted from employee’s paychecks. • It is the purpose of Chapter 14 to show you how to use Peachtree to enter payroll default information, add employees, make the correct journal entries for payroll, and to print payroll reports.

  3. Software Objectives, p. 495 • Explore the Payroll Setup Wizard. • Enter initial payroll fields. • Enter employee and employer default information. • Journalize and post payroll journal entries. • Print paychecks. • Print the financial statements • Make four backups: two for Richard’s Sales & Service; two for the end-of-chapter exercises.

  4. Web Objectives, p. 507 • Use your Internet browser to go to the book’s website at www.mhhe.com/yacht2005 • Go to the Internet Activity link on the book’s website. Then, select WEB EXERCISES PART 3. Complete the fourth web exercise in Part 3-Salary Calculator. • Use a word processing program to write summaries of the websites that you visited

  5. Peachtree Tips • The exercises in Part 3 are cumulative. Chapters 11, 12 and 13 must be completed before starting Chapter 14. • The Payroll Entry window is the Payroll Journal. • The payroll tax withholdings calculated automatically when students select the Payroll Entry task are for example purposes only. They do not reflect exact withholding amounts. For an additional fee, Peachtree Software has a payroll tax update service. • To learn more about Peachtree Software’s payroll tax service, visit their website at www.peachtree.com/taxtable.

  6. Peachtree Tips (concluded) Follow these steps to check the global tax table version: • Start Peachtree. Open any company. • From the menu bar, click on Help; About Peachtree Accounting. The Installed Tax Service shows 19000101.

  7. Backing Up Chapter 14 This information is also shown on page 362. • .

  8. Chapter 14 Topics • Software & web objectives, p. 495 • Getting started, pp. 498-499 a. Checking your global tax table version, pp. 500-501 b. Establishing the payroll account, p. 501 • Initial payroll fields, pp. 501-505 • Entering Employee and Employer Default Information, pp. 505-510 • Entering employee maintenance information, pp. 510-512 6. Backing up your data, pp. 512-513 7. Payroll entry, pp. 513-519 • Printing the payroll journal, pp. 519-521 • Printing the general ledger trial balance, pp. 521-522

  9. Chapter 14 Topics (concluded) • Printing the financial statements, pp. 523-525 • Backing up Chapter 14 data, p. 526 • Internet activity, p. 527 • Summary and review, p. 527 a. Going to the net, p. 527 b. Multiple-choice questions, pp. 528-530 c. Exercise 14-1, pp. 530-533 d. Exercise 14-2, p. 533 e. Chapter 14 index, p. 534

  10. Getting started, pp. 498-499 • Complete steps 1 – 2g. on pages 498-499. • Remember, you must complete Chapters 11, 12, and 13 before starting Chapter 14.

  11. Checking Your Global Tax Table Version, p. 500 • From the menu bar, click on Help; About Peachtree Accounting. The Peachtree Complete Accounting 2005 window appears. • Read the information on page 500. Click on <OK> to close this window.

  12. Establishing the payroll account, p. 501 • In order to establish the payroll checking account, transfer funds from Santa Barbara Bank (Account No. 10200) to the Payroll Checking Account (Account No. 10300). Read the transaction information on p. 501.

  13. Payroll Setup Wizard, p. 501-502 • Click on Maintain; Default Information, Payroll Setup Wizard. This window is shown on p. 502. • Click on <Next>. Read step 2, p. 502. Click <Next>.

  14. Payroll Setup Wizard, continued, p. 503 • Complete steps 4 and 5 on p. 503. In the State box, select CA. Type 3.4 in the Unemployment Percent box. • Click on the Sales Defaults folder tab.

  15. Payroll Setup Wizard, continued, p. 504 • Click <Next>. The Default Payroll G/L Accounts window appears. • You will make changes to these defaults on page 508 and 509. Complete steps 7-12 on pages 504 and 505.

  16. Entering employee and employer default information, pp. 505-506 • Read the information on p. 505. • Click on Maintain; Default Information, Employees. Complete steps 1 and 2 on p. 505. This window is shown on p. 506. • Click on <OK>.

  17. Assign Payroll Fields for EmployEE Paid Taxes, p. 506 • Click on the arrow next to EmployEE Paid Taxes. This window is shown on p. 506. • Click on <OK>.

  18. Assign Payroll Fields for EmployER Paid Taxes, p. 507 • Click on the arrow next to EmployER Paid Taxes. Click on the down-arrow in the State Disability (SDI) field. • Click on <Ok> to return to the Employee Defaults window. Then, select the Pay Levels tab.

  19. Employee Defaults, p. 507 • Make sure you have selected the Pay Levels tab on the Employee Defaults window. Then for Overtime, select Account No. 77600, Overtime Expense. This window is shown on p. 507.

  20. Employee Defaults (continued) p. 508 • Complete steps 10–17 on p. 508. This window is shown below step 17, p. 508.

  21. EmployER Fields tab, pp. 509-510 • Complete step 18 on p. 509. This window is shown below step 18 on p. 509. • On p. 510, complete step 19 by clicking on <OK> to save your changes and return to the menu bar.

  22. Entering employee maintenance information, pp. 510-512 • Click on Maintain; Employees/Sales Reps. Complete steps 1 and 2 on p. 510.

  23. Maintain Employees/Sales Reps, p. 511 • Click on the Withholding Info tab. Complete the information shown on p. 510. • Complete steps 4 – 6 on pp. 511.

  24. Maintain Employees/Sales Reps, p. 512 • After completing step 6 on page 511, this window shows Pay Info. • Complete steps 7 – 12 on p. 512.

  25. Backing up your data, p. 512-513 • Complete steps 1 – 6 on pp. 512-513 to back up your data. • Use Chapter 14 Begin as the back up name.

  26. Payroll Entry, pp. 513-515 • Read the information on pages 513-515 • Complete steps 1 – 9 on pages 514-515 to issue a payroll check. The Payroll Entry window is shown on p. 515. • Click on the Print icon.

  27. Print Forms: Payroll Checks, pp. 516-517 • Complete step 11 on p. 516. Highlight OCR - PR Preprint 1 Stub. Read the comment on page 516. The Preview Forms: Payroll Checks window is shown on p. 516. • Click <OK>.

  28. First Check Number, pp. 517-519 • Type 101 as the First Check Number. This window is shown on p. 517 under step 14. • Click on <Print>. Compare your check with the one shown on page 517. Complete steps 16 and 17 on p. 518. Compare your check with the one shown on p. 518. Then, issue the checks shown in step 18.

  29. Printing the payroll journal, p. 519-521 • Complete steps 1 and 2 on p. 519. • Compare your payroll journal to the one shown on pp. 519-521.

  30. Printing the general ledger trial balance, p. 521-522 • Complete steps 1 and 2 on p. 521. • Compare your general ledger trial balance to the one shown on p. 522.

  31. Printing the financial statements, pp. 523-525 • Complete steps 1-3 on pp. 523-525. • Compare your financial statements with the ones shown on pages 523, 524, and 525.

  32. Backing Up Chapter 14 Data, p. 526 • Complete steps 1-6 on page 526. • The back up name is Chapter 14. • Click on <Ok>. Compare your check to the one shown on p. 381. Record the additional payments shown on p. 382.

  33. Glossary of TermsChapter 14

  34. Exemptions, p. 495 • These are withholding allowances claimed by the employee. The number of exemptions or withholding allowances usually includes one for the employee, one for the employee’s spouse, and one for each dependent.

  35. Withholding allowances, p. 495 • Exemptions claimed by the employee. The number of exemptions or withholding allowances usually includes one for the employee, one for the employee’s spouse, and one for each dependent.

  36. FICA taxes, p. 496 • This deduction from wages is also called the social security tax and provides qualified workers who retire at age 62 or older with monthly payments from the federal government. A portion of this tax is for Medicare.

  37. Medicare, p. 496 • A portion of FICA taxes (also called social security taxes) deducted from wages of qualified workers. Medical benefits called Medicare are received by retirees after reaching age 65.

  38. W-2 forms, p. 496 • An annual report of an employee’s wages subject to FICA and federal income tax that shows the amounts of these taxes that were withheld.

  39. Internet Activity, p. 526

  40. Going to the Net, p. 527 Access the Employer Reporting and Instructions website at www.ssa.gov/employer/. Link to General W-2 Filing Information, then answer these questions. • What are dates that employers must send W-2 information to the Social Security Administration? (Include the dates for both electronic and paper filing.) • When must employers give employees their W-2? • What two forms do employers send to the Social Security Administration?

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