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Chapter 14: Employees, Payroll, and Account Reconciliation

Chapter 14: Employees, Payroll, and Account Reconciliation. Employees, Payroll, and Account Reconciliation.

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Chapter 14: Employees, Payroll, and Account Reconciliation

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  1. Chapter 14: Employees, Payroll, and Account Reconciliation

  2. Employees, Payroll, and Account Reconciliation • 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 journal entries for payroll, print payroll reports, and complete account reconciliation.

  3. Software Objectives, p. 515 • 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 • Reconcile Highland Bank Account and the Payroll Checking Account. • Compare the vendor ledgers, customer ledgers, and inventory valuation report to the associated general ledger accounts. • Make four backups: two for Nancy’s Sales & Service; two for the end-of-chapter exercises.

  4. Web Objectives, p. 515 • Use your Internet browser to go to the book’s website at www.mhhe.com/yacht2007. • 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 Wizard. • Use a word processing program to write a summary 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. The About Peachtree Accounting window is shown on page 520.

  7. Backing Up Chapter 14 This information is also shown on page 376. • .

  8. Chapter 14 Topics • Software & web objectives, p. 515 • Getting started, pp. 518-519 a. Checking your global tax table version, pp. 519-520 b. Establishing the payroll account, p. 521 • Initial payroll fields, pp. 521-524 • Entering Employee and Employer Default Information, pp. 524-529 • Entering employee maintenance information, pp. 529-531 6. Backing up your data, pp. 531-532 7. Payroll entry, pp. 532-538 • Printing the payroll journal, pp. 538-539 • Account reconciliation, p. 540 a. Highland Bank Statement, p. 541 b. Payroll Checking Account bank statement, p. 542. c. Print reports, pp. 542-546

  9. Chapter 14 Topics (concluded) • Printing the general ledger trial balance, p. 547 • Printing the financial statements, pp. 548-550 • Backing up Chapter 14 data, p. 551 • Internet activity, p. 551 • Summary and review, p. 552 a. Going to the net, pp. 552-553 b. Multiple-choice questions, pp. 553-555 c. Exercise 14-1, pp. 556-558 d. Exercise 14-2, pp. 559-561 e. Chapter 14 index, p. 562

  10. Getting started, pp. 518-519 • Complete steps 1 – 2g. on pages 518-519. • Remember, you must complete Chapters 11, 12, and 13 before starting Chapter 14.

  11. Checking Your Global Tax Table Version, p. 520 • From the menu bar, click on Help; About Peachtree Accounting. The Peachtree Complete Accounting window appears. • Read the information on page 520. Click on <OK> to close the About Peachtree Accounting window.

  12. Establishing the payroll account, p. 521 • In order to establish the payroll checking account, transfer funds from Highland Bank (Account No. 10200) to the Payroll Checking Account (Account No. 10300). Read the transaction information on p. 521.

  13. Initial Payroll Fields, p. 521-524 • From the Employees & Payroll page, click . Then, select Set Up Employee Defaults. This window is shown on p. 522. • Read step 3, p. 522. Accept the default accounts by clicking <Next>.

  14. Payroll Setup Wizard, concluded, pp. 523-524 • The 401 (k) Setup window appears. Since you are not making any changes, click <Next>. • The Vacation Time Tracking and Sick Time Tracking Setup window appears. Click <Next>. • Complete steps 7 on pp. 523. The Payroll Setup Complete window is shown on p. 523. • Click Finish. • Click on the Sales Defaults folder tab.

  15. Entering employee and employer default information, pp. 524-529 • Read the information on p. 524. From the Employees & Payroll page, click on and select Set Up Employee Defaults. • Select the Assign Payroll Fields for W-2s arrow. This is step 1 on p. 524. The Assign Payroll Fields for W-2s window is shown on p. 525 below step 2. • Click <OK>.

  16. Assign Payroll Fields for EmployEE Paid Taxes, p. 525 • Click on the arrow next to EmployEE Paid Taxes. This window is shown on p. 525 below step 4. • Click <OK>.

  17. Assign Payroll Fields for EmployER Paid Taxes, p. 526 • Click on the arrow next to EmployER Paid Taxes. Click on the down-arrow in the State Disability (SDI) field. Select SDI. This window is shown on p. 526 below step 7. • Click on <OK> to return to the Employee Defaults window. Then, select the Pay Levels tab.

  18. Employee Defaults, p. 526 • Make sure you have selected the Pay Levels tab on the Employee Defaults window. Then for Overtime, select Account No. 77600, Overtime Expense. The Employee Defaults, Pay Levels window is shown on p. 526 below step 9.

  19. EmployEE Defaults (continued) p. 527 • Complete steps 10–17 on p. 527. This window is shown below step 17, p. 527.

  20. EmployER Fields tab, pp. 528-529 • Complete step 18 on p. 528. This window is shown below step 18 on p. 528. • On p. 529, complete step 19 by clicking on <OK> to save your changes.

  21. Entering employee maintenance information, pp. 529 • From the Employees & Payroll page, click . • Select New Employee. The Maintain Employees/Sales Reps window appears. • Complete the employee information shown on step 2, p. 529.

  22. Entering Employees Maintenance Information, p. 529 • Click on the Withholding Info tab. Complete step 3 on page 529. This window is shown at the top of page 530. • Complete steps 4 – 6 on pp. 530.

  23. Maintain Employees/Sales Reps, pp. 530-531 • After completing step 6 on page 530, this window shows Pay Info. • Complete steps 7 – 12 on p. 531.

  24. Backing up your data, p. 531-532 • Complete steps 1 – 6 on pp. 531-532 to back up your data. • Use Chapter 14 Begin as the back up name.

  25. Payroll Entry, pp. 532-538 • Read the information on pages 532-534 • Complete steps 1 – 9 on pages 533-534 to issue a payroll check. The Payroll Entry window is shown on p. 534. • Click on the Print icon.

  26. Print Forms: Payroll Checks, pp. 535-536 • Complete step 11 on p. 535. Select OCR Multi-Purpose PR Laser. Read the comment on page 535. The Preview Forms: Payroll Checks window is shown on p. 535 below step 11. • Click <OK>. Complete steps 12 and 13 on pages 535-536.

  27. First Check Number, pp. 536-537 • Type 101 as the First Check Number. The Print Forms: Payroll Checks window is shown on p. 536 below step 14. • Click on <Print>. Compare your check with the one shown on page 536. Complete step 15, p. 236; and step 17, p. 537. Then, issue the checks shown in step 18.

  28. Printing the payroll journal, pp. 538-539 • Complete steps 1 and 2 on pp. 538 & 539. • Compare your payroll journal to the one shown on pp. 538-539.

  29. Account Reconciliation, pp. 540-542 • Read page 540. Peachtree’s general ledger is integrated with other parts of the program. • The Highland Bank Statement is on p. 541 • Payroll Checking Account Bank Statement is on p. 542 • Printing Reports: Account Reconciliation, General Ledgers, Customer Ledgers, Vendor Ledgers, and Inventory reports are on pp. 542-546

  30. Printing the general ledger trial balance, p. 547 • Complete steps 1 and 2 on p. 547. • Compare your general ledger trial balance to the one shown on p. 547.

  31. Printing the financial statements, pp. 548-550 • Complete steps 1-3 on pp. 548-550. • Compare your financial statements with the ones shown on pages 548, 549, and 550.

  32. Backing Up Chapter 14 Data, p. 551 • Complete steps 1-6 on page 551. • 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. 516 • 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. 516 • 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. 516 • 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. 516 • 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. 516 • 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. 551

  40. Going to the Net, pp. 552-553 Access the Employer Reporting and Instructions website at http://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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