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Payroll. Introduction to Accounting: An Integrated Approach 3rd Edition Penne Ainsworth, Dan Deines Mcgraw-Hill2004, ISBN 0072473835 . Start to Finish #8. Presented by. Hello, and welcome to this brief tutorial on debits and credits.

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payroll

Payroll

Introduction to Accounting: An Integrated Approach

3rd Edition

Penne Ainsworth, Dan Deines

Mcgraw-Hill2004, ISBN 0072473835

Start to Finish #8

Presentedby

Hello, and welcome to this brief tutorial on debits and credits.

To continue to the next slide click on the right arrow, to go to the previous slide click the left arrow.

To end this tutorial click on the END button.

University of Wyoming – Delta Alpha Chapter

END

background info
During the month there are many expenditures in the business cycle. Some examples are payroll, utilities, and rent.

In this problem we will assume that FICA is 7%, FIT is 15%, and FUTA is 2%

Background Info
during the month
Day 2: Paid insurance for the month, $750.Day 4: Purchased $450 of office supplies for cash.Day 5: Purchased 100 tee shirts and 120 logos. Suppliers offered terms of 2/10, n/30.Day 8: Received a utility bill for $75. Record as a miscellaneous payable. Day 16: Paid for purchases made on Day 5.Day 18: Recorded payroll for the month. Salary and wage expense is $4000Day 24: Recorded payroll tax expense for the month.Day 30: Made adjusting entries for expenditure process activities. There are $50 of supplies on hand. During the Month:
november 2
Paid insurance for the month, $750

cash

Rent Expense

750

750

November 2

1st: Debit Rent Expense $750

2nd: Credit Cash $750 in the General Journal

Remember that Expenses will be closed to Owner’s Equity

november 4th
Purchased $450 of office supplies for cash.

Supplies

cash

100

100

November 4th

1st: Debit Supplies $100

2nd: Credit Cash $100

november 5th
Purchased 100 T-shirts and 120 logos with the terms 2/10, n/30.

T-Shirt Inventory

Logo Inventory

Accounts Payable

1000

120

1120

November 5th

Remember, each shirt costs $10 and each logo costs $.1

1st: Debit T-shirts $1,000

2nd: Debit Logos $120

3rd: Credit Accounts Payable $1,120

november 8th
Opened the water bill for $75, but have not paid.

Accounts Payable

Utilities Expense

75

75

November 8th

1st: Debit Utilities Expense $75

2nd: Credit Accounts Payable $75

Remember when you pay this bill you will Debit Accounts Payable and Credit Cash

november 16th
Paid for the T-shirts and Logos bought on November 5th.

cash

Accounts Payable

1120

1120

November 16th

1st: Debit Accounts Payable $1120

2nd: Credit Cash $1120

Since you did not pay within the discount period you do not receive a purchase discount

november 18th
Recorded Payroll for November. Total Wages and Salaries were $4,000.

Payroll Expense

Accounts Payable

4000

4000

November 18th

1st: Debit Payroll Expense

2nd: Credit Accounts Payable

november 24th
Recorded Payroll Tax Expense For the month

Payroll Tax Expense

FICA Payable

280

960

November 24th

First: Calculate Tax Amount

  • Payroll is $4000
  • FICA is 7% , FICA Payable is (4000*7%) or $280
  • FUTA is 2%, FUTA Payable is (4000*2%) or $80
  • FIT is 15%, FIT Payable is (4000*15%) or $600

Second: Debit Payroll Tax Expense for the total amount

Third: Credit each FICA, FUTA, and FIT Payable Account

november 30

Prepaid Insurance

Insurance Expense

750

750

November 30
  • Make Adjusting Entries. Assume that $50 dollars of Office Supplies are left.

1st Adjustment: Prepaid Insurance

First: Debit Insurance Expense

Second: Credit Prepaid Insurance

Remember that this adjustment makes the Prepaid Insurance Account 0 because the insurance expired during the month.

750

november 301

Office Supplies

Office Supplies Expense

450

400

400

November 30
  • Adjusting Entries (Cont.)

2nd Adjustment is to Office Supplies

First: Debit Office Supplies Expense

Second: Credit Office Supplies

Remember that there are only $50 worth of supplies left at the end of the month. This means that $400 worth were used.

november 31

Accounts Payable

Cash

4000

4000

November 31
  • Adjusting Entries (Cont.)

3rd Adjustment: Payroll Expense

1st: Debit Accounts Payable $4000

2nd: Credit Cash $4000

november 311

Cash

FICA Payable

960

280

November 31
  • Adjusting Entries (Cont.)

4th Adjustment: Payroll Tax Expense

1st: Debit each FICA,. FIT, and FUTA account

2nd: Credit Cash for the total amount

adjusting journal entries
Adjusting Journal Entries

This is what the general journal will look like after all the adjusting entries are made.