1. Chapter 13 Vocab Test Review
Test Review Strategy
Understanding how the brain processes, stores and retrieves information can also improve your study habits. For some people, cramming for a test can work in the short term, but by studying only once in a concentrated fashion, the learner has not signaled to the brain that the information is important. So while the initial study session of French vocabulary words starts the process of learning, it’s the next review session a few days later that forces the brain to retrieve the information — essentially flagging it as important and something to be remembered.
“When you are cramming for a test, you are holding that information in your head for a limited amount of time,” Mr. Carey says. “But you haven’t signaled to the brain in a strong way that’s it’s really valuable.”
One way to signal to the brain that information is important is to talk about it. …or play “teacher” based on the information [you] have studied. Self-testing and writing down information on flashcards also reinforces learning.
Source: Better Ways to Learn, By Tara Parker-Pope  .

2. Different Forms of Payroll Information
Lesson 13-1
Different Forms of Payroll Information
LO1
The total of gross earnings for all employees earning hourly wages, salaries, and commissions is called salary expense.
The debit to Salary Expense will be equal to the Total Gross Pay of all employees for the pay period.

3. Analyzing Payment of Payroll
Lesson 13-1
Analyzing Payment of Payroll
In each pay period, the payroll information for each employee is recorded on his or her employee earnings record.

4. Analyzing Payment of Payroll
Lesson 13-1
Analyzing Payment of Payroll
The payroll register and the employees earning record contain all the information needed to prepare a payroll as well as prepare the quarterly payroll tax reports.

5. Analyzing Payment of Payroll
Lesson 13-1
Analyzing Payment of Payroll
LO1
Employee Income Tax Payable
Dec
Banking: An amount equal to net pay is deposited into a separate payroll checking account. The amount deposited covers everyone’s take home pay.
Social Security Tax Payable
Dec
Medicare Tax Payable
Dec
Salary Expense
Dec. 15 8,076.75 =
Health Insurance Premiums Payable
Dec
Retirement Contributions Payable
Dec
Salary Expense Debit is equal to total gross pay.
Dec. 15 6,269.87
Cash
Dec. 15 6,269.87

6. Journalizing Payment of a Payroll
Lesson 13-1
Journalizing Payment of a Payroll
LO2
December 15. Paid cash for semimonthly payroll, $6, (total payroll, $8,076.75, less deductions: employee income tax, $494.00; social security tax, $500.77; Medicare tax, $117.11; health insurance premiums, $230.00; retirement contributions, $465.00). Check No. 732.
Withheld taxes (deductions) are liabilities until paid to the government.
Total Earnings
Amount Paid to Employees
Accounts Credited
Payroll Deductions

7. Employer Payroll Taxes are Business Expenses
Lesson 13-2
Employer Payroll Taxes are Business Expenses
Employer Social Security and Medicare taxes: Employer matches what the employee pays (Same tax rate 6.2% and 1.45%)
A federal tax paid by employers to administer the unemployment program is called federal unemployment tax.
Commonly referred to as FUTA.
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.
Understand: Unemployment taxes are only paid by the employer

8. Calculating Unemployment Taxes
Note: Some workers already met the 7,000 tax base and are not included in the FUTA Earnings.
Lesson 13-2
Calculating Unemployment Taxes
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 of 7,000 and prior accumulated earnings 2
Enter the FUTA earnings 4
Enter prior accumulated earnings 1
Enter earnings for the current pay period 3
AKA: Unemployment taxable earnings

9. 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
This is recorded in the general journal right after the employee’s payroll is recorded in the cash payments journal. It’s a new tax liability that must be recorded.
Unemployment Tax Payable—Federal
Dec
Unemployment Tax Payable—State
Dec

10. Journalizing Employer Payroll Taxes
Lesson 13-2
Journalizing Employer Payroll Taxes
LO3
The employer payroll taxes become a new liability when the employees are paid. Therefore they are journalized at the end of the pay period in the general journal—even though they are actually paid to the government after the quarter ends.

11. Employer’s Quarterly Federal Tax Return
Lesson 13-3
Employer’s Quarterly Federal Tax Return
LO4
Heading 1
Number of Employees 2
Total Quarterly Earnings 3
Income Tax Withheld 4
Employee and Employer Social Security and Medicare Taxes 5
Total Employee and Employer Social Security and Medicare Taxes 6
Total Taxes 7

12. Employer’s Quarterly Federal Tax Return
Lesson 13-3
Employer’s Quarterly Federal Tax Return
LO4
State Abbreviation 8
Monthly Schedule Depositor 9
Monthly Deposits 10
Total Deposits 11
Each employer is required by law to periodically report the payroll taxes withheld from employee salaries.
Each employer must report this info quarterly.

13. Lesson 13-3
Employer Annual Reporting of Payroll Taxes—in addition to the quarterly reports
LO4

14. Employer Annual Report to Employees of Taxes Withheld -- W-2 Form
Lesson 13-3
Employer Annual Report to Employees of Taxes Withheld -- W-2 Form
The W-2 form reports an employee’s annual earnings and withholdings for federal income social security and Medicare taxes. Employer must mail it before January 31 of the following year. (0nly provided once a year.)
Remember, there is a tax base for Social Security—but not for Medicare. (In 2015, the SS tax base is $118,500. When I earn more than that, I don’t have to pay the 6.2% social security tax for the rest of the year. --Shock value is over—I do not earn that much money here at CHS. )

15. Lesson 13-4
Paying the Liability for Employee Income Tax, Social Security Tax, and Medicare Tax
LO5
Employers must pay to the federal, state, and local governments all payroll taxes withheld from employee earnings as well as the employer payroll taxes.
Understand: The payment of payroll taxes to the government is referred to as a deposit.
The 12-month period that ends on June 30 of the prior year that is used to determine how frequently a business must deposit payroll taxes is called the lookback period.
Understand: The timing of the payroll tax payments to the government is based on the amount owed. The more they owe, the more frequently the government wants to be paid. Some (large) businesses must pay on the next banking day.

16. Making Federal Tax Deposits
Lesson 13-4
Making Federal Tax Deposits
LO5
New employers are monthly schedule depositors for the first calendar year of business.
After a lookback period is established, the business must evaluate whether a change in its deposit period is required. (If the tax liability is not that large, the business can just deposit the payments quarterly.)
Federal tax deposits must be paid using electronic fund transfers.
Deposits can also be made using the Electronic Federal Tax Payment System (EFTPS).
Tax rules change periodically.

17. Lesson 13-4
Journalizing Payment of Liability for Employee Income Tax, Social Security Tax, and Medicare Tax
LO5
Jan. 15 Bal
Dec
Dec
Employee Income Tax Payable
January 15. Paid cash for liability for employee income tax, $998.00; social security tax, $2,023.06; and Medicare tax, $473.14; total, $3, Check No. 748.
Social Security Tax Payable
Dec
Dec
Jan. 15 Bal 2,023.06
This is recorded in the cash payments journal.
It is considered a “deposit”.
Jan. 15 Bal
Medicare Tax Payable
Dec
Dec
Dec
Cash
Jan. 15 3,494.20

18. Lesson 13-4
Journalizing Payment of Liability for Employee Income Tax, Social Security Tax, and Medicare Tax
LO5
Check Number
Check Amount
Source document for paying off this tax liability to the government is a check.

19. Paying the Liability for Federal Unemployment Tax
Lesson 13-4
Paying the Liability for Federal Unemployment Tax
LO5
FUTA (Federal Unemployment) taxes are paid by the end of the month following each quarter if the liability amount is more than $
FUTA tax is paid to the federal government using electronic funds transfer or the Electronic Federal Tax Payment System.
The deposit for FUTA tax is similar to the deposit required for income tax, social security tax, and Medicare tax.

20. Journalizing Payment of Liability for Federal Unemployment Tax
Lesson 13-4
Journalizing Payment of Liability for Federal Unemployment Tax
LO5
January 31. Paid cash for federal unemployment (FUTA) tax liability for quarter ended December 31, $ Check No. 749.
Unemployment Tax Payable—Federal
Nov. 30 Bal
Dec
Dec
Jan. 31 Bal
Dec. 31 Bal
Cash
Jan 1
Date
Account Debited 2 3
Check Number
Debit Amount 4
Check Amount 5

21. Journalizing Payment of Liability for State Unemployment Tax
Lesson 13-4
This state tax is used to pay benefits to the state’s unemployed workers
January 31. Paid cash for state unemployment (SUTA) tax liability for quarter ended December 31, $ Check No. 750.
Unemployment Tax Payable—State
Nov. 30 Bal
Dec
Dec
Jan. 31 Bal
Dec. 31 Bal
Source document is a check.
Cash
Jan
Understand: In general, employers are required to pay state unemployment taxes during the month following each calendar quarter.

22. The End