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Payroll Liabilities and Tax Records

Learn how to compute business payroll deductions, journalize payroll entries, analyze payroll transactions, and understand the importance of timely payroll postings. Explore how payroll deductions impact business liabilities and the process of withholding and remitting taxes to government agencies.

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Payroll Liabilities and Tax Records

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  1. Chapter 13 $ Payroll Liabilities and Tax Records $ Making Accounting Relevant Federal, state, and local governments pass tax laws in order to generate revenue for government services. $ $ Can you name some uses for your tax dollars?

  2. Chapter 13 $ Section 1 Journalizing and Posting the Payroll $ • What You’ll Learn • How to compute the business payroll deductions. • How to record the payroll entry in the general journal. $ $

  3. Section 1 Journalizing and Posting the Payroll (con’t.) Chapter 13 $ Why It’s Important Payroll deductions are liabilities of the business. It is essential that payroll deductions are journalized and posted in a timely manner. $ $ $ • Key Term • Salaries Expense

  4. Section 1 Journalizing and Posting the Payroll (con’t.) Chapter 13 $ Analyzing the Payroll Transaction • Employee earnings are a normal operating expense of a business. • Various deductions, such as income and FICA taxes, are withheld from gross earnings each pay period. • Net pay is the amount actually paid out in cash by the employer to the employees. $ $ $

  5. Section 1 Journalizing and Posting the Payroll (con’t.) Chapter 13 $ Analyzing the Payroll Transaction con’t. • The employee retains the amounts withheld until it is time to pay the appropriate government agencies and businesses. • The amount withheld but not yet paid are liabilities of the business. $ $ $

  6. Amount actually paid out in cash by the employer to the employees. Section 1 Journalizing and Posting the Payroll (con’t.) Chapter 13 $ Journalizing the Payroll $ JOURNAL ENTRY $ $

  7. Demonstration Problem 13-1

  8. 18 200- May 16 Salaries Expense 4955.30 Employees’ Federal Income Tax Payable 793.-- 99.11 Employees’ State Income Tax Payable Social Security Tax Payable 307.23 Medicare Tax Payable 71.85 Hospital Insurance Premiums Payable 114.50 Union Dues Payable 140.-- Cash in Bank (Net Pay) 3429.61 Payroll Register 5/16 ck #345

  9. Section 1 Journalizing and Posting the Payroll Chapter 13 $ $ Assignment $ $

  10. Section 1 Journalizing and Posting the Payroll (con’t.) Chapter 13 $ Check Your Understanding p321 $ • Thinking Critically 1&2 • Computing in the Business World • Problem 13-1 $ $

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