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LESSON 14-1

LESSON 14-1. Recording A Payroll. PAYROLL REGISTER. page 340. Payroll. Salary Expense. Employees Medicare Tax Payable. Employees Fed Inc Tax Payable. Employees SS Tax Payable. Health Insurance Payable. “Others Payable”. Cash. Journalizing the Payroll for Employees

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LESSON 14-1

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  1. LESSON 14-1 Recording A Payroll

  2. PAYROLL REGISTER page 340 Payroll Salary Expense Employees Medicare Tax Payable Employees Fed Inc Tax Payable Employees SS Tax Payable Health Insurance Payable “Others Payable” Cash Journalizing the Payroll for Employees Use the Payroll Register and transferring the information to the Cash Payments Journal LESSON 14-1

  3. ANALYZING PAYMENT OF A PAYROLL page 341 LESSON 14-1

  4. JOURNALIZING PAYMENT OF A PAYROLL page 342 December 15. Paid cash for payroll, $4,609.46. Check No. 335. 2 1 3 4 5 6 7 1. Write the date. 5. Write the total amount paid to employees. 2. Write the title of the account debited. 6. Write the titles of accounts credited. 3. Write the check number. 7. Write the amounts credited. 4. Write the account debited. LESSON 14-1

  5. LESSON 14-1 What account title is used to journalize the Total Earning column? A. Salary Expense What account title is used to journalize the Federal Income Tax column? A. Employee Income Tax Payable

  6. LESSON 14-2 Recording Employer Payroll Taxes

  7. LESSON 14-2 Employers must pay four separate payroll taxes Employer SS Tax (6.2% (.062) - $87,000 Tax Base) Employer Medicare Tax (1.45% (.0145) - No Tax Base) Federal Unemployment Tax (0.8% (.008)- $7,000 Tax Base) State Unemployment Tax (5.4% (.054) - $7,000 Tax Base)

  8. 1 UNEMPLOYMENT TAXABLE EARNINGS page 374 2 3 1. Enter accumulated earnings and total earnings for each employee. 2. Enter unemployment taxable earnings. 3. Total the Unemployment Taxable Earnings column. LESSON 14-2

  9. UnemploymentTaxableEarnings FederalUnemploymentTax Rate FederalUnemploymentTax × = UnemploymentTaxableEarnings StateUnemploymentTax Rate StateUnemploymentTax × = UNEMPLOYMENT TAXES page 375 $790.00 × 0.8% = $6.32 $790.00 × 5.4% = $42.66 LESSON 14-2

  10. JOURNALIZING EMPLOYER PAYROLL TAXES page 376 (continued on next slide) December 15. Recorded employer payroll taxes expense, $485.92, for the semimonthly pay period ended December 15. Taxes owed are: social security tax, $354.11; Medicare tax, $82.83; federal unemployment tax, $6.32; state employment tax, $42.66. Memorandum No. 63. LESSON 14-2

  11. JOURNALIZING EMPLOYER PAYROLL TAXES (continued from previous slide) page 376 2 4 1 3 5 6 1. Write the date. 4. Write the debit amount. 2. Write the title of the expense account debited. 5. Write the titles of the liability accounts credited. 3. Write the memorandum number. 6. Write the credit amounts. LESSON 14-2

  12. TERMS REVIEW page 377 • federal unemployment tax • state unemployment tax LESSON 14-2

  13. LESSON 14-3 Reporting Withholding And Payroll Taxes

  14. LESSON 14-3 IRS Form W-2 Wage and Tax Statement Issued to each employee by January of the next calendar year. Required of employers who withholds income tax, SS tax and MD tax from employees. Four copies (A to D) are given to each employee. Copies B & C go employee. Employee attaches B to federal income tax return and keeps C for personal records. Employer send copy A to Social Security Administration and keeps D for the business’ records

  15. EMPLOYER ANNUAL REPORT TO EMPLOYEES OF TAXES WITHHELD page 349 LESSON 14-3

  16. LESSON 14-3 Each employer is required by law to periodically report the following: Payroll taxes withheld from employee salaries Employer payroll taxes due the government Employers must file a quarterly federal tax return showing the federal income tax, SS tax and MD tax due to the government. IRS Form 941

  17. EMPLOYER’S QUARTERLY FEDERAL TAX RETURN page 350 (continued on next slide) 1 2 1. Heading 2. Number of employees LESSON 14-3

  18. 3 4 5 6 7 EMPLOYER’S QUARTERLY FEDERAL TAX RETURN page 350 (continued on next slide) 3. Total quarterly earnings 6. Social security plus Medicare taxes 4. Income tax withheld 5. Employee and employer social security and Medicare taxes 7. Total taxes LESSON 14-3

  19. 8 8 8 EMPLOYER’S QUARTERLY FEDERAL TAX RETURN page 350 (continued from previous slide) 9 8. Total taxes for each month 9. Total taxes LESSON 14-3

  20. LESSON 14-3 IRS Form W-3 Transmittal of Wage and Tax Statements Is submitted to the Social Security Administration by February 28 each year W-3 reports the previous year’s earning and payroll taxes withheld for all employees. Attached to Form 2-3 is Copy A of each employee Form W-2. For business’ with more 250 employees they must submit the information electronically At the end of the calendar year, employers must also report to the federal and state governments a summary of all earnings paid to employees during the twelve months

  21. EMPLOYER ANNUAL REPORTING OF PAYROLL TAXES page 352 LESSON 14-3

  22. 14-4 Paying Withholding and Payroll Taxes Employers must pay to the federal, state and local governments to following: All payroll taxes withheld from employees Employer Payroll taxes This payment is referred to as a DEPOSIT Two amounts determine how often deposits are made to the federal government Amount of payroll taxes collected during the current deposit period Amount of payroll taxes owed during a prior 12-month period The 12-month period that ends on June 30th of the prior year is called the LOOKBACK PERIOD.

  23. PAYING THE LIABILITY FOR EMPLOYEE INCOME TAX, SOCIAL SECURITY TAX, AND MEDICARE TAX page 383 LESSON 14-4

  24. FORM 8109 Federal Deposit Coupon New employers are monthly schedule depositors for the first calendar year of business IRS Form 8109 coupon book issued by IRS for monthly deposit Type of tax – federal income, social security and medicare is identified by marking the 941 circle Deposits can also be made using the EFTPS (Electronic Federal Tax Payment System). Businesses having deposits of more than $200K during the last calendar year must use EFTPS

  25. FORM 8109, FEDERAL DEPOSIT COUPON page 355 LESSON 13-1

  26. JOURNALIZING PAYMENT OF LIABILITY FOR EMPLOYEE INCOME TAX, SOCIAL SECURITY TAX, AND MEDICARE TAX page 356 January 15. Paid cash for liability for employee income tax, $757.00; social security tax, $1,451.38; and Medicare tax, $339.42; total, $2,547.80. Check No. 347. 1 5 3 2 4 1. Write the date. 3. Write the check number. 2. Write the titles of the three accounts debited. 4. Write the debit amounts. 5. Write the amount of the credit. LESSON 14-4

  27. Paying the Liability for Federal Unemployment Insurance Federal Unemployment Insurance is paid by the end of the month following each quarter if the liability amount is more $100. Use IRS form 8109 selecting 940 for the type of tax Indicate which quarter is being paid.

  28. PAYING THE LIABILITY FOR FEDERAL UNEMPLOYMENT TAX page 355 LESSON 14-3

  29. JOURNALIZING PAYMENT OF LIABILITY FOR FEDERAL UNEMPLOYMENT TAX page 358 January 31. Paid cash for federal unemployment tax liability for quarter ended December 31, $34.60. Check No. 367. 1 2 3 4 5 1. Write the date. 2. Write the title of the account debited. 3. Write the check number. 4. Write the debit amount. 5. Write the amount of the credit to Cash. LESSON 14-4

  30. JOURNALIZING PAYMENT OF LIABILITY FOR STATE UNEMPLOYMENT TAX page 358 January 31. Paid cash for state unemployment tax liability for quarter ended December 31, $233.55. Check No. 368. 1 2 3 4 5 1. Date 2. Account debited 3. Check number 4. Debit amount 5. Credit amount LESSON 14-.4

  31. AUDIT 14-3 and 14-4 • When most employer furnish a W-2 statement to their employees? • Jan 31st • What taxes are included in the quarterly federal tax return filed by the employer? • Federal Tax, SS, and Medicare • For monthly schedule depositor, when are payroll taxes paid to the federal government. • The 15th of the following month • What are two different uses for Form 8109? • For paying payroll taxes and pay federal unemployment taxes

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