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Accounting I

Learn how to analyze and journalize payroll payments, calculate and record unemployment and payroll taxes, and prepare annual reports for employees and the IRS.

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Accounting I

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  1. Accounting I Chapter 14 – Payroll Accounting, Taxes, & Reports

  2. PAYROLL REGISTER Lesson 14-1, page 332

  3. ANALYZING PAYMENT OF PAYROLL Lesson 14-1, page 333

  4. JOURNALIZING PAYMENT OF A PAYROLL December 15. Paid cash for semimonthly payroll, $2989.02 (total payroll, $3,803.75, less deductions: employee income tax, $273.00; social security tax, $247.26; Medicare tax, $57.07; health insurance premiums, $182.40; U.S. Savings Bonds, $35.00; United Way donations, $20.00). Check No. 312. Entered Debit side Credit side Credit side Debit side Credit side Credit side Credit side Credit side Accounts Affected Salary Expense Employee Income Tax Payable Social Security Tax Payable Medicare Tax Payable Health Insurance Premiums Payable U.S. Savings Bond Payable United Way Donations Payable Cash Classification Expense Liability Liability Liability Liability Liability Liability Asset Change Increased Increased Increased Increased Increased Increased Increased Decreased Lesson 14-1, page 334

  5. 4 6 7 JOURNALIZING PAYMENT OF A PAYROLL 2 5 3 1 1. Write the date. 2. Write the title of the account debited. 3. Write the check number. 4. Write the amount debited to Salary Expense. 5. Write the amount credited to Cash. 6. Write the titles of the accounts credited. 7. Write the credit amounts. Lesson 14-1, page 334

  6. Work Together & On Your Own – Page 335

  7. TERMS REVIEW federal unemployment tax state unemployment tax Lesson 14-2, page 340

  8. TERMS REVIEW Federal Unemployment Tax A federal tax used for state & federal administrative expenses of the unemployment program. Lesson 14-2, page 338

  9. TERMS REVIEW State Unemployment Tax A state tax used to pay benefits to unemployed workers. Lesson 14-2, page 338

  10. UNEMPLOYMENT TAXABLE EARNINGS 2 1 1 3 1. Enter accumulated earnings and total earnings for each employee. 2. Enter unemployment taxable earnings. 3. Total the unemployment taxable earnings column. Lesson 14-2, page 337

  11. Calculate Unemployment Taxes—Federal Calculate Unemployment Taxes—State         UNEMPLOYMENT TAXES Unemployment Federal Federal Taxable Unemployment Unemployment Earnings  Tax Rate = Tax $183.75  0.8% = $1.47 Unemployment State State Taxable Unemployment Unemployment Earnings  Tax Rate = Tax $183.75  5.4% = $9.92 Lesson 14-2, page 338

  12. Payroll Taxes Expense Social Security Tax Payable Medicare Tax Payable 315.72 57.07 Unemployment Tax Payable—Federal Unemployment Tax Payable—State JOURNALIZING EMPLOYER PAYROLL TAXES December 15. Recorded employer payroll taxes expense, $315.72, for the semimonthly pay period ended Dec. 15. Taxes owed are: social security tax, $247.26; Medicare tax, $57.07; federal unemployment tax, $1.47; state unemployment tax, $9.92. Memorandum No. 63. Entered Debit side Credit side Credit side Credit side Credit side Accounts Affected Payroll Taxes Expense Soc. Security Tax Pay. Medicare Tax Payable Unemp. Tax Pay.—Fed. Unemp. Tax Pay.—State Classification Expense Liability Liability Liability Liability Change Increased Increased Increased Increased Increased normal balance normal balance normal balance    247.26 normal balance normal balance   1.47 9.92 Lesson 14-2, page 339

  13. JOURNALIZING EMPLOYER PAYROLL TAXES 2 3 4 1 6 5 1. Write the date. 2. Write the expense account debited. 3. Write the memorandum number. 4. Write the debit amount. 5. Write the titles of the liability accounts credited. 6. Write the credit amounts. Lesson 14-2, page 339

  14. Work Together & On Your Own – Page 340

  15. EMPLOYER ANNUAL REPORT TO EMPLOYEES OF TAXES WITHHELD Lesson 14-3, page 341

  16. 3 3 8 EMPLOYER’S QUARTERLY FEDERAL TAX RETURN 1. Heading 2. Number of Employees 1 3. Total Quarterly Earnings 4. Income Tax Withheld 5. Employee and Employer Social Security and Medicare Taxes 2 4 6. Social Security plus Medicare Taxes 5 6 7. Total Taxes 7 8. Total Taxes for Each Month 9. Total Taxes 9 Lesson 14-3, page 342

  17. Calculate Social Security and Medicare Taxes Calculate Social Security and Medicare Taxes         PREPARING EMPLOYER’S QUARTERLY FEDERAL TAX RETURN Total Earnings  Tax Rate = Tax Social Security $22,575.00  13% = $2,934.75 Medicare $22,575.00 3% = $ 677.25 Employee Employer Social Social Federal Income Security and Security and Federal Tax Tax Withheld + Medicare Tax + Medicare Tax = Liability Dec. 1-15 $273.00 + $304.33 + $304.33 = 881.66 Dec. 16-31 $269.00 + 302.08 + $302.08 = $873.16 Totals $542.00 + 606.41 + 606.41 = $1,754.82 Lesson 14-3, page 343

  18. EMPLOYER ANNUAL REPORTING OF PAYROLL TAXES Lesson 14-3, page 344

  19. Work Together & On Your Own – Page 345

  20. FORM 8109, FEDERAL DEPOSIT COUPON Lesson 14-4, page 347

  21. Cash Employee Inc. Tax Payable Social Security Tax Payable Medicare Tax Payable 227.42 542.00 985.40 1,754.82 JOURNALIZING PAYMENT OF LIABILITY FOR EMPLOYEE INCOME TAX, SOCIAL SECURITY TAX, AND MEDICARE TAX January 15. Paid cash for liability for employee income tax, $542.00; social security tax, $985.40; and Medicare tax, $227.42; total, $1,754.82. Check No. 330. Entered Debit side Debit side Debit side Credit side Accounts Affected Employee Inc. Tax Pay. Social Security Tax Pay. Medicare Tax Payable Cash Classification Liability Liability Liability Asset Change Decreased Decreased Decreased Decreased normal balance normal balance normal balance    normal balance  Lesson 14-4 page 348

  22. JOURNALIZING PAYMENT OF LIABILITY FOR EMPLOYEE INCOME TAX, SOCIAL SECURITY TAX, AND MEDICARE TAX 1 3 5 4 2 1. Write the date. 2. Write the title of the three accounts debited. 3. Write the check number. 4. Write the three debit amounts. 5. Write the amount of the credit to Cash. Lesson 14-4, page 348

  23. PAYING THE LIABILITY FOR FEDERAL UNEMPLOYMENT TAX Lesson 14-4, page 349

  24. Unemployment Tax Payable—Federal Cash 8.40 8.40 JOURNALIZING PAYMENT OF LIABILITY FOR FEDERAL UNEMPLOYMENT TAX January 31. Paid cash for federal unemployment tax liability for quarter ended December 31, $8.40. Check No. 343. Entered Debit side Credit side Accounts Affected Unemployment Tax Payable—Federal Cash Classification Liability Asset Change Decreased Decreased normal balance normal balance   Lesson 14-4, page 350

  25. JOURNALIZING PAYMENT OF LIABILITY FOR FEDERAL UNEMPLOYMENT TAX 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. Lesson 14-4, page 350

  26. JOURNALIZING PAYMENT OF LIABILITY FOR STATE UNEMPLOYMENT TAX 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. Lesson 14-4, page 350

  27. Work Together & On Your Own – Page 351

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