Patchogue-Medford High School
Accounting I – Chapter 13 Notes
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)
Cash in Bank – Net amount of earnings paid to employee.
- Amount of Liability owed to agency or company
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.
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
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)