Recording Payroll Employer Taxes Chapter 13 Lesson 13-2

Recording a Payroll Review (Lesson 14-1) Which taxes do employees pay? –Employee Income Tax (Federal Income Tax) –Social Security Tax –Medicare Tax When recording a payroll, which account is debited for the total earnings? –Salary Expense

Recording a Payroll Review (Lesson 14-1) When recording a payroll, Cash is credited. What is the amount of the Cash credit? –Total net pay for the pay period Payroll taxes are recorded as (select one) –Assets –Liabilities –Owner’s Equity

Recording a Payroll Review (Lesson 14-1) When recording a payroll, Cash is credited. What is the amount of the Cash credit? –Total net pay for the pay period Payroll taxes are recorded as (select one) –Assets –Liabilities –Owner’s Equity

RECORDING EMPLOYER PAYROLL TAXES

Employer Payroll Taxes (Match the employee taxes) Social Security Tax (6.2%) Medicare Tax (1.45%) These are the only payroll taxes paid by both the employees and the employer.

Employer Payroll Taxes Employer Social Security and Medicare taxes Unemployment taxes—funds used to pay workers for limited periods of unemployment Federal unemployment tax –A federal tax paid by employers to administer the unemployment program is called federal unemployment tax, commonly referred to as FUTA. State unemployment tax –A state tax paid by employers that is used to pay benefits to unemployed workers is called state unemployment tax, commonly referred to as SUTA.

Calculating Unemployment Taxes Tax paid on first $7,000 of income per employee Federal rate is 6.2% State rate is 5.4% Deduct State rate from Federal rate So, Federal Unemployment Tax is.8% Complete Math Worksheet, page 15.

Calculating Unemployment Taxes THREEΔGREEN PRODUCTS, INC. Calculation of FUTA Earnings for December 15, 20-- Pay Period Employee Prior Accumulated Earnings Earnings to Equal FUTA Tax Base Earnings for Current Pay PeriodFUTA Earnings Butler, John P.$27,195.00$ 0.00$1,466.25$ 0.00 Feng, Anthony R.5, , , Lendsey, Ann C.1, , Prisock, Mary G.44, , Swann, Justin A.16, , Wells, Cary B.6, , $2, Enter prior accumulated earnings 1 1 Enter the difference between the FUTA tax base and prior accumulated earnings 2 2 Enter earnings for the current pay period 3 3 Enter the FUTA earnings 4 4

Journalizing Employer Payroll Taxes December 15. Recorded employer payroll taxes expense, $757.01, for the semimonthly pay period ended December 15. Taxes owed are: social security tax, $500.77; Medicare tax, $117.11; federal unemployment tax, $17.95; state unemployment tax, $ Memorandum No. 44. Payroll Taxes Expense Dec Social Security Tax Payable Dec Medicare Tax Payable Dec Unemployment Tax Payable—Federal Dec Unemployment Tax Payable—State Dec

Analyzing Employer Payroll Taxes Debit Payroll Taxes Expense Credit Social Security Tax Payable Medicare Tax Payable Unemployment Tax Payable— Federal Unemployment Tax Payable— State

Journalizing Employer Payroll Taxes 1 1 Date 3 3 Memorandum NumberAccount Debited 2 2 Amount Debited 4 4 Accounts Credited 5 5 Amounts Credited 6 6

QUESTIONS?