1. © 2014 Cengage Learning. All Rights Reserved.
Learning Objectives
LO3 Calculate and record employer payroll taxes.
© 2014 Cengage Learning. All Rights Reserved.

2. Employer Payroll Taxes
Lesson 13-2
Employer Payroll Taxes
LO3
Employer Social Security and Medicare taxes
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.

3. Calculating Unemployment Taxes
Lesson 13-2
Calculating Unemployment Taxes
LO3
THREEΔGREEN PRODUCTS, INC.
Calculation of FUTA Earnings
for December 15, 20-- Pay Period 1 2 3 4 5
Employee
Prior Accumulated
Earnings
Earnings to Equal FUTA Tax Base
Earnings for Current Pay Period
FUTA Earnings
Butler, John P.
$27,195.00
$ 0.00
$1,466.25
Feng, Anthony R.
5,260.00
1,740.00
1,494.00
Lendsey, Ann C.
1,648.00
5,352.00
240.00
Prisock, Mary G.
44,000.00
0.00
2,000.00
Swann, Justin A.
16,089.00
1,432.50
Wells, Cary B.
6,490.00
510.00
1,444.00
$2,244.00
Enter the difference between the FUTA tax base and prior accumulated earnings 2
Enter prior accumulated earnings 1
Enter earnings for the current pay period 3
Enter the FUTA earnings 4

4. Journalizing Employer Payroll Taxes
Lesson 13-2
Journalizing Employer Payroll Taxes
LO3
Payroll Taxes Expense
Dec
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.
Social Security Tax Payable
Dec
500.77
Medicare Tax Payable
Dec
117.11
Unemployment Tax Payable—Federal
Dec
Unemployment Tax Payable—State
Dec

5. Journalizing Employer Payroll Taxes
Lesson 13-2
Journalizing Employer Payroll Taxes
LO3 1
Date
Account Debited 2 3
Memorandum Number
Amount Debited 4
Accounts Credited 5
Amounts Credited 6

6. Lesson 13-2 Audit Your Understanding
1. What is the tax rate ThreeGreen must pay on employees for each of the following taxes: social security, Medicare, federal unemployment, and state unemployment?
ANSWER
Social security: 6.2% of employee earnings up to a maximum of $106, in each calendar year
Medicare: 1.45% of total employee earnings
FUTA: 0.8% on the first $7, earned by each employee
SUTA: 5.4% on the first $7, earned by each employee

7. Lesson 13-2 Audit Your Understanding
2. What is the amount of each employee’s earnings that is subject to federal and state unemployment taxes at ThreeGreen?
ANSWER
The first $7,000.00