Patchogue-Medford High School

Accounting I – Chapter 13 Notes

Mr. Butzke

Chapter 13 – Payroll Liabilities and Tax Records                                                                                                                                                                                                                                                                                                Page 310

Objective: Students will be able to demonstrate their knowledge of recording payroll transactions into the G/L by calculating the payroll earnings, tax, and liabilities. They will address all liabilities associated with the payroll by filing reports associated with the payroll.

General Ledger Accounts Used (page 343)

     Assets: (Credit)

              Cash in Bank – Net amount of earnings paid to employee.

                                  - Amount of Liability owed to agency or company

     Liabilities: (Credits)

              Federal Income Tax Payable – FIT withholdings owed to Feds

              NYSIT Payable – withholdings owed to NYS

              FICA Payable – SS & Medicare withholdings from employee and employer

              Health Insurance Payable – withholdings owed to Insurance companies

              Union Dues Payable – withholdings due to your union for your union dues

              Federal Unemployment Tax Act – FUTA – max 5.4% on $7,000, paid for by the employer.

              State Unemployment Tax Act – SUTA – max of .8% on $7,000 paid for by the employer.

     Expenses: (Debits)

              Salary Expense – Gross salary earned by employee before deductions

              Wage Expense – Gross wages earned by employee before deductions

              Employer Payroll Tax Expense – Employers portion of FICA tax, SUTA and FUTA

Posting Payroll Entry page 346. Cash is always credited when paying (posting ) payroll.(pg 352)

              Do problem 13-1, Determine payroll amounts, page 348, WB pg 300.

Accumulated Employee Earnings – Running total of earnings to see how much tax is paid and earnings earned and paid.

Payroll Tax Reports/Forms:

     W-2 - Wage and tax earnings and withholdings – annual (pg 361)

     W-3 – Employers transmittal of employee’s wages and taxes – annual (pg 361)

     940 - Employers FUTA Return – annual (pg 362)

     941 – Employers Quarterly FIT Return – every three months (pg 362)

     1099 – Employers report on amounts paid to outside venders/consultants - annual

              Do problem 13-2, Calculate employers payroll tax, page 353, WB pg 300

              Do problem 13-3, Entries for payroll liabilities, page 353, WB pg 300

              Do problem 13-4, Payment of payroll liability, page 363, WB pg 301

Terms Page 365

Questions Page 366

Problems

Prob.  13-6      Calc employer’s payroll tax      TB pg 368   WB pg 302          

Prob.  13-7      Recording payroll payment       TB pg 368   WB pg 302  PC 315

Prob.  13-8      Journalizing payroll                  TB pg 368    WB pg 305 PC 315        Q318         

Prob.  13-9      Record & post payroll              TB pg 369    WB pg 306 PC 316        Q319

(Prob.  13-10   Record & post payroll              TB pg 370    WB pg 311 PC 317)