1. LESSON 13-1 Payroll Accounting, Taxes, and Reports
CHAPTER 13
4/20/2017
Payroll Accounting, Taxes, and Reports

2. 13-1 RECORDING PAYROLL
page 369
The payroll register and employee earnings records provide all the
payroll information need to prepare payroll and payroll tax reports.
The payroll journal entry is based on the total of the Earnings Total
columns, each deduction column, and the Net Pay column,

3. ANALYZING PAYMENT OF A PAYROLL
page 370
Remember Debits = Credits!

4. JOURNALIZING PAYMENT OF A PAYROLL
page 371
December 15. Paid cash for payroll, $4, 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.

5. 13-2 RECORDING EMPLOYER PAYROLL TAXES
Employers must pay to the government taxes withheld from employee earnings.
-The amounts withheld are liabilities until they are paid.
Employers must ALSO pay several of their own payroll taxes:
Social Security (6.2% on earnings up to $87,000.00)
Medicare Tax (1.45% no earnings cap)
Federal Unemployment Tax
State Unemployment Tax
These taxes are based on a percentage of total employee earnings.

6. UNEMPLOYEMENT TAXABLE EARNINGS
page 374 2 1 3
1. Enter accumulated earnings and total earnings for each employee.
2. Enter unemployment taxable earnings.
3. Total the Unemployment Taxable Earnings column.

7. UNEMPLOYMENT TAXES
page 375
Federal Unemployment Tax - A federal tax used for state and federal administrative expenses of the unemployment program.
(.8% on first $7, of total earnings)
Federal Unemployment Tax =
Federal Unemployment Tax Rate ×
Unemployment Taxable Earnings
$790.00 ×
0.8% =
$6.32
State Unemployment Tax - A state tax used to pay benefits to unemployed workers. (5.4% on first $7, of total earnings)
State Unemployment Tax =
State Unemployment Tax Rate ×
Unemployment Taxable Earnings
$790.00 ×
5.4% =
$42.66

8. 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, $ Memorandum No. 63.
The liability is incurred when salaries are paid.
The transaction to record payroll taxes is journalized the same day the payroll is journalized.

9. JOURNALIZING EMPLOYER PAYROLL TAXES
LESSON 13-1
4/20/2017
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.

10. 13-3 Reporting Withholding and Payroll Taxes
page 378
W-2 Wage and Tax Statement - is a report prepared by the employer
that shows total year’s earnings and amounts withheld for taxes for
an employee.
You get the info from the
employee earnings record
W2 is an IRS form
Employers are required by
law to furnish a W-2 to
each employee by Jan 31.
Employees attach copies
to federal and state &
local tax returns.

11. EMPLOYER’S QUARTERLY FEDERAL TAX RETURN
page 379
(continued on next slide)
Each employer must file a quarterly federal tax return showing federal
income tax, social security tax, and Medicare tax due the gov’t.
Form 941 is submitted
every three months.
Filed the last day of the
month following the end
of the calendar quarter.
Info needed to prepare
Form 941 is obtained
from the employee
earnings record. 1 2
1. Heading
2. Number of employees

12. EMPLOYER’S QUARTERLY FEDERAL TAX RETURN
page 379
(continued on next slide) 3 4 5 6 7
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

13. EMPLOYER’S QUARTERLY FEDERAL TAX RETURN
page 379
(continued from previous slide) 9 8
8. Total taxes for each month
9. Total taxes

14. EMPLOYER ANNUAL REPORTING OF PAYROLL TAXES
LESSON 13-1
4/20/2017
EMPLOYER ANNUAL REPORTING OF PAYROLL TAXES
page 381
Form W-3, Transmittal of Wage and Tax Statement is sent to the
Social Security Administration by February 28 each year.
Reports the previous years
earnings and payroll taxes
withheld for all employees.
A copy of each employee
Form W-2 is attached to the
Form W-3.
Companies with 250+ have
to send to IRS electronically.

15. 13-4 Paying Withholding & Payroll Taxes
Employers must pay to the federal, state, and local governments all
payroll taxes withheld from employee earnings as well as the employer
payroll taxes.
The payment of payroll taxes with the government is referred to as a
Deposit. Two amounts determine how often deposits are made to the
federal government.
The amount of payroll taxes collected during the current deposit
period.
The amount of payroll taxes owed during the prior 12-month period.
-the 12-month period that ends on June 30th of the prior year
is called the lookback period.

16. LESSON 13-1
4/20/2017
PAYING THE LIABILITY FOR EMPLOYEE INCOME TAX, SOCIAL SECURITY TAX, AND MEDICARE TAX
page 383

17. FORM 8109, FEDERAL DEPOSIT COUPON
page 384
This form is used to deposit federal, social security and Medicare taxes.
-Hobby Shack pays monthly.
-Deposit with an authorized bank or electronically.

18. JOURNALIZING PAYMENT OF LIABILITY FOR EMPLOYEE INCOME TAX, SOCIAL SECURITY TAX, AND MEDICARE TAX
page 385
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, 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.

19. PAYING THE LIABILITY FOR FEDERAL UNEMPLOYMENT TAX
page 386
Federal unemployment insurance is paid by the end of the month
following each quarter if the liability amount is more than $100.
-all outstanding amounts are due at the end of the calendar year.
-deposit with an authorized bank.

20. JOURNALIZING PAYMENT OF LIABILITY FOR FEDERAL UNEMPLOYMENT TAX
page 387
January 31. Paid cash for federal unemployment tax liability for quarter ended December 31, $ 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.

21. JOURNALIZING PAYMENT OF LIABILITY FOR STATE UNEMPLOYMENT TAX
LESSON 13-1
4/20/2017
JOURNALIZING PAYMENT OF LIABILITY FOR STATE UNEMPLOYMENT TAX
page 387
January 31. Paid cash for state unemployment tax liability for quarter ended December 31, $ Check No. 368. 1 2 3 4 5
1. Date
2. Account debited
3. Check number
4. Debit amount
5. Credit amount