Slide 10 1 Chapter 10 Liabilities Financial Accounting

Slide 10 -1

Chapter 10 Liabilities Financial Accounting, IFRS Edition Weygandt Kimmel Kieso Slide 10 -2

Payroll-Related Liabilities Payroll and Payroll Taxes Payable Appendix 10 D The term “payroll” pertains to both: Salaries - managerial, administrative, and sales personnel (monthly or yearly rate). Wages - store clerks, factory employees, and manual laborers (rate per hour). Determining the payroll involves computing three amounts: (1) gross earnings, (2) payroll deductions, and (3) net pay. Slide 10 -3 SO 12 Prepare entries for payroll and payroll taxes under U. S. law.

Payroll-Related Liabilities Illustration: Assume a corporation records its payroll for the week of March 7 as follows: Mar. 7 Salaries and wages expense FICA tax payable Federal income tax payable State income tax payable Salaries and wages payable 100, 000 7, 650 21, 864 2, 922 67, 564 Record the payment of this payroll on March 11. Mar. 11 Salaries and wages payable Cash Slide 10 -4 67, 564 SO 12 Prepare entries for payroll and payroll taxes under U. S. law.

Payroll-Related Liabilities Payroll tax expense results from three taxes that governmental agencies levy on employers. These taxes are: FICA tax Federal unemployment tax State unemployment tax Slide 10 -5 SO 12 Prepare entries for payroll and payroll taxes under U. S. law.

Payroll-Related Liabilities Illustration: Based on the corporation’s $100, 000 payroll, the company would record the employer’s expense and liability for these payroll taxes as follows. Payroll tax expense 13, 850 FICA tax payable Federal unemployment tax payable State unemployment tax payable Slide 10 -6 7, 650 800 5, 400 SO 12 Prepare entries for payroll and payroll taxes under U. S. law.

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