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)