Payroll Liabilities and Tax Records CHAPTER 13 Section

Payroll Liabilities and Tax Records CHAPTER 13 Section 1 – Journalizing and Posting the Payroll Section 2 – Employer’s Payroll Taxes

Chapter Objectives � Record payroll transactions in the general journal. � Describe the employer’s payroll taxes. � Compute and complete payroll tax expense forms. � Record the payment of tax liabilities in the general journal

Section 1 – Journalizing & Posting the Payroll � Payroll is a major expense of a business. � In additional to salaries to the employees, businesses are required to make tax payments to the government.

Section 1 – Journalizing & Posting the Payroll � Salaries Expense - The expense account used to record employees’ earnings. � The deductions from an employee’s check are liabilities of the company. The amounts are withheld but not yet paid; the business owes them. Type of Deduction Liability Account Federal Income Tax Payable Social Security Tax ________ Medicare Tax __________ Tax Payable Hospital Insurance Premiums ________________

Section 1 – Journalizing & Posting the Payroll Entering the information from the Payroll Register into the General Journal: See Payroll Register on page 323 Gross Earnings Total of Each Deduction Net Pay Total

Section 1 – Journalizing & Posting the Payroll Debit Salary Expense Total Paid to Employees (Gross) Credit = Liabilities (Payables) Deductions from Earnings (Mandatory & Optional) Credit + Cash in Bank Amount of Paychecks (Net)

Section 2 – Employer’s Payroll Taxes Employer-Paid Taxes on Employees’ Wages: Employer’s FICA Taxes Match employee’s Social Security & Medicare Federal Unemployment Tax FUTA State Unemployment Tax SUTA Unemployment Taxes are collected to provide funds for workers who are temporarily out of work; usually paid only by the employer

Section 2 – Employer’s Payroll Taxes Entering the information for the Payroll Taxes into the General Journal: Total of all Taxes Credited FICA Matching SUTA FUTA

Section 2 – Employer’s Payroll Taxes Complete Problem 13 -2 on page 353 Social Security Medicare $299. 87 $4836. 60 x 6. 2% (. 062) $70. 13 $4836. 60 x 1. 45% (. 0145) Federal Unemployment $38. 69 $4836. 60 x 0. 8% (. 008) State Unemployment $261. 18 $4836. 60 x 5. 4% (. 054)

Problem 13 -3 on page 353 Are these items included in the journal entry for payroll OR for employer’s payroll taxes? Employees’ Federal Income tax Payroll Employer’s Social Security tax Payroll Taxes U. S. Savings Bond Payroll Employer’s Medicare tax Payroll Taxes Federal Unemployment tax Payroll Taxes Employees’ State Income tax Payroll Union Dues Payroll Employees’ Social Security tax Payroll State Unemployment tax Payroll Taxes Employees’ Medicare tax Payroll

Assignment � Connect �Problems 13 -5 and 13 -6 � Read pages 354 – 364 in textbook