Chapter 14: Payroll

©The McGraw-Hill Companies, Inc. 2 of 40Payroll 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.

©The McGraw-Hill Companies, Inc. 3 of 40 Software Objectives, p. 507 Explore the Payroll Setup Wizard. Enter initial payroll fields. Enter employee and employer default information. Journalize and post payroll journal entries. Print paychecks. Print financial statements Make four backups: two for Matt's Service Merchandise; two for the end-of-chapter exercises.

©The McGraw-Hill Companies, Inc. 4 of 40 Web Objectives, p. 507 Use your Internet browser to go to the book’s website at 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, The Salary Calculator. Use a word processing program to write summaries of the websites that you visited

©The McGraw-Hill Companies, Inc. 5 of 40 Peachtree Tips Peachtree Tips The exercises in Part 3 are cumulative. Chapters 11, 12 and 13 must be completed before starting Chapter 14. Restore the Chapter 13.ptb back up made on pp to start Chapter 14. The Payroll Entry window is the Payroll Journal. The educational version of the software included with the textbook includes payroll tax withholding tables for the 50 states. The withholding amounts are for example purposes only and do not reflect accurate payroll taxes. To learn more about Peachtree Software’s payroll tax service, visit their website at

©The McGraw-Hill Companies, Inc. 6 of 40 Peachtree Tips (concluded) Peachtree Tips (concluded) Follow these steps to check the Peachtree version and tax table version. 1.Start Windows, then Peachtree. Open any company. 2.From the menu bar, click on Help; About Peachtree Accounting. The Installed Tax Service shows

©The McGraw-Hill Companies, Inc. 7 of 40 Backing Up Chapter 14 Disk Backup Name KB Page Nos. 7 of 9 A:\Chapter 14 Begin 494KB525 A:\Chapter KB539 8 of 9 A:\Exercise KB545 A:\Exercise KB546.

©The McGraw-Hill Companies, Inc. 8 of 40 Chapter 14 Topics 1. Software & web objectives, p Getting started, pp a. Checking your global tax table version, pp b.Establishing the payroll account, p Initial payroll fields, pp Entering Employee and Employer Default Information, pp Entering employee maintenance information, pp Backing up your data, p Payroll entry, pp Printing the payroll journal, pp Printing the general ledger trial balance, pp

©The McGraw-Hill Companies, Inc. 9 of 40 Chapter 14 Topics (concluded) 10. Printing the financial statements, pp Backing up Chapter 14 data, p Internet activity, p Summary and review, p. 540 a. Going to the net, p. 540 b. Multiple-choice questions, pp c. Exercise 14-1, pp d. Exercise 14-2, p. 546 e. Chapter 14 index, p. 548

©The McGraw-Hill Companies, Inc. 10 of 40 Getting started, pp Complete steps 1 – 2i. on pages Remember, you must complete Chapters 11, 12, and 13 before starting Chapter 14.

©The McGraw-Hill Companies, Inc. 11 of 40 Checking Your Global Tax Table Version, p. 512 From the menu bar, click on Help; About Peachtree Accounting. The Peachtree Complete Accounting 2004 screen appears. Read the information on page 512. Click on to close this window.

©The McGraw-Hill Companies, Inc. 12 of 40 Establishing the payroll account, p. 513 In order to establish the payroll checking account, transfer funds from La Jolla Bank (Account No ) to the Payroll Checking Account (Account No ). Read the transaction information on p. 513.

©The McGraw-Hill Companies, Inc. 13 of 40 Payroll Setup Wizard, p Click on Maintain; Default Information, Payroll Setup Wizard. This screen is shown on p Click on. Read step 2, p Click.

©The McGraw-Hill Companies, Inc. 14 of 40 Payroll Setup Wizard, continued, p. 515 Complete steps 4 and 5 on p In the State box, select CA. Type 3.4 in the Unemployment Percent box. Click on the Sales Defaults folder tab.

©The McGraw-Hill Companies, Inc. 15 of 40 Payroll Setup Wizard, continued, p. 516 Click. The Default Payroll G/L Accounts screen appears. You will make changes to these defaults on page 522 and 523. Complete steps 7-12 on pages 516 and 517.

©The McGraw-Hill Companies, Inc. 16 of 40 Entering employee and employer default information, pp Read the information on p Click on Maintain; Default Information, Employees. Complete steps 1 and 2 on p This screen is shown on p Click on.

©The McGraw-Hill Companies, Inc. 17 of 40 Assign Payroll Fields for EmployEE Paid Taxes, p. 518 Click on the arrow next to EmployEE Paid Taxes. This screen is shown on p Click on.

©The McGraw-Hill Companies, Inc. 18 of 40 Assign Payroll Fields for EmployER Paid Taxes, p. 519 Click on the arrow next to EmployER Paid Taxes. Click on the down-arrow in the SDI field. Click on to return to the Employee Defaults window. Then, select the Pay Levels tab.

©The McGraw-Hill Companies, Inc. 19 of 40 Employee Defaults, p. 519 Make sure you have selected the Pay Levels tab on the Employee Defaults window. Then for Overtime, select Account No , Overtime Expense. This screen is shown on p. 525.

©The McGraw-Hill Companies, Inc. 20 of 40 Employee Defaults (continued) p. 520 Complete steps 10–17 on p This screen is shown below step 17, p. 520

©The McGraw-Hill Companies, Inc. 21 of 40 EmployER Fields tab, pp Complete step 18 on p This screen is shown below step 18 on p On p. 522, complete step 19 by clicking on to save your changes and return to the menu bar.

©The McGraw-Hill Companies, Inc. 22 of 40 Entering employee maintenance information, pp Click on Maintain; Employees/Sales Reps. Complete steps 1 and 2 on p. 522.

©The McGraw-Hill Companies, Inc. 23 of 40 Maintain Employees/Sales Reps, p. 523 Click on the Withholding Info tab. Complete the information shown on p Complete steps 4 – 6 on pp. 523.

©The McGraw-Hill Companies, Inc. 24 of 40 Maintain Employees/Sales Reps, p. 524 After completing step 6 on page 523, this screen shows Pay Info. Complete steps 7 – 12 on pp

©The McGraw-Hill Companies, Inc. 25 of 40 Backing up your data, p. 525 Complete steps 1 – 9 on page 525 to back up your data. Use Chapter 14 Begin as the back up name.

©The McGraw-Hill Companies, Inc. 26 of 40 Payroll Entry, pp Read the information on pages Complete steps 1 – 9 on pages to issue a payroll check. The Payroll Entry screen is shown on p Click on the Print icon.

©The McGraw-Hill Companies, Inc. 27 of 40 Print Forms: Payroll Checks, pp Complete step 11 on p Highlight OCR - PR Preprint 1 Stub. Read the comment on page 529. The Preview Forms: Payroll Checks screen is shown on p. 529 Click.

©The McGraw-Hill Companies, Inc. 28 of 40 First Check Number, p Type 101 as the First Check Number. This screen is shown on p. 529 under step 14. Click on. Compare your check with the one shown on page 530. Complete steps 16 and 17 on p Compare your check with the one shown on p Then, issue the checks shown in step 18.

©The McGraw-Hill Companies, Inc. 29 of 40 Printing the payroll journal, p Complete steps 1 and 2 on p Compare your payroll journal to the one shown on pp

©The McGraw-Hill Companies, Inc. 30 of 40 Printing the general ledger trial balance, p Complete steps 1 and 2 on p Compare your general ledger trial balance to the one shown on p. 535.

©The McGraw-Hill Companies, Inc. 31 of 40 Printing the financial statements, pp Complete steps 1-3 on pp Compare your financial statements with the ones shown on pages 536, 537, and 538.

©The McGraw-Hill Companies, Inc. 32 of 40 Backing Up Chapter 14 Data, p. 539 Complete steps 1-9 on page 539. The back up name is Chapter 14. Click on. Compare your check to the one shown on p Record the additional payments shown on p. 382.

©The McGraw-Hill Companies, Inc. 33 of 40 Glossary of Terms Chapter 14

©The McGraw-Hill Companies, Inc. 34 of 40 Exemptions, p. 507 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.

©The McGraw-Hill Companies, Inc. 35 of 40 Withholding allowances, p. 507 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.

©The McGraw-Hill Companies, Inc. 36 of 40 FICA taxes, p. 508 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.

©The McGraw-Hill Companies, Inc. 37 of 40 Medicare, p. 508 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.

©The McGraw-Hill Companies, Inc. 38 of 40 W-2 forms, p. 508 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.

©The McGraw-Hill Companies, Inc. 39 of 40 Internet Activity, p Go to the book’s website at In the Student Center list, link to Internet Activities. 3 Link to WEB EXERCISES PART 3. 4 Complete the SALARY CALCULATOR exercise. Read steps Follow the steps shown on the book’s website to complete this Internet activity. 6 Using a word processing program, write a brief summary of what you find. Include all appropriate website addresses.

©The McGraw-Hill Companies, Inc. 40 of 40 Going to the Net, p. 540 Access the Employer Reporting and Instructions website at 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.) 2. When must employers give employees their W-2? 3. What two forms do employers send to the Social Security Administration?