4/30/2011
Chapter 9:
Employer’s Taxes, Payments,
and Reports
Employer’s Payroll Tax Expense
• A general expense account used for recording:
– FICA tax (employer’s share)
– State unemployment tax (varies by state)
– Federal unemployment tax
• Paid by employer on behalf of employees
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4/30/2011
Employer’s Payroll Tax Components
• FICA tax (employer’s share)
– Calculate Social Security amount (using 6.2%,
textbook assumes a $94,200 ceiling)
– Calculate Medicare amount (using 1.45%, no ceiling)
• State unemployment tax (SUTA)
– Levied only on the employer in most states
– Rate varies by state (book assumes 5.4%, $7,000 ceiling)
– Pays subsistence benefits to unemployed workers
• Federal unemployment tax (FUTA)
– Levied only on the employer
– Rate varies (book assumes 0.8%, $7,000 ceiling)
– Used to administer federal unemployment fund
SUTA
FUTA
Do not use calculated
amounts from employee’s
deductions. You must take
totals and recalculate
amounts. (As a result,
there may be rounding
differences.)
FICA
(Add SSI and Medicare
together)
State Unemployment Tax
(Rates Vary)
Federal Unemployment Tax
(Rates Vary)
958.20 x 5.4% =
$51.74
958.20 x 0.8% =
$7.67
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4/30/2011
T Accounts: Beginning Balance
Payroll Tax Expense
DR
CR
+
-
FICA Tax Payable
DR
CR
-
+
1,431.33
State Unemployment Tax Payable
DR
CR
Balance from
employees’
deductions
-
+
Federal Unemployment Tax Payable
DR
CR
-
+
T Accounts: Total Payroll Tax Expense
Payroll Tax Expense
DR
CR
+
1,431.31
51.74
7.67
1,490.72
-
FICA Tax Payable
DR
CR
-
+
1,431.33
1,431.31
Employer’s
share of
FICA is
computed
from column
totals and
may not
match
employees’
share exactly
State Unemployment Tax Payable
DR
CR
-
+
51.74
Total Payroll Tax
Expense, journalized
and posted
Federal Unemployment Tax Payable
DR
CR
-
+
7.67
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4/30/2011
Demonstration Problem
Payroll Problem
Payroll Register for Week Ended Oct. 14, 20--
Names
Chin, Sue
Chueng, Vicky
Girvin, M. A.
Ho, Dennis
Pham, H. L.
Smith, J. C.
Beg. Cum. Earn.
84,500.00
86,000.00
56,900.00
43,690.00
5,255.00
6,750.00
Week's Earnings
1,430.00
2,050.00
680.00
700.00
650.00
550.00
Unemployment
UE Max
$7,000.00
Fed Rate
0.008
State Rate
0.054
FICA
SS Max
$94,200.00
SS Rate
6.20%
0
0
FICA
Medicare Max
M Rate
1.45%
0
0
Calculate Deductions,
Payments, and Salary Expense
Name
Chin, Sue
Chueng, Vicky
Girvin, M. A.
Ho, Dennis
Pham, H. L.
Smith, J. C.
Totals
Federal
Income Tax
238.00
348.50
55.00
85.00
45.00
46.00
817.50
Beginning
Cumulative
Earnings
84,500.00
86,000.00
56,900.00
43,690.00
5,255.00
6,750.00
283,095.00
State
Income Tax
28.56
41.82
6.60
10.20
5.40
5.52
98.10
*
Payables
Payroll Register for Week Ended Oct. 14, 20-Ending
Taxable Earnings
Cumulative
Social
Total
Earnings
Unemployment
Security
0.00
1,430.00
1,430.00
85,930.00
88,050.00
2,050.00
0.00
2,050.00
680.00
57,580.00
0.00
680.00
44,390.00
700.00
0.00
700.00
650.00
5,905.00
650.00
650.00
250.00
550.00
550.00
7,300.00
6,060.00
289,155.00
900.00
6,060.00
Payroll Register for Week Ended Oct. 14, 20-Deductions
Social
Total
Security Tax
Medicare Tax
Deductions
20.74
88.66
375.96
127.10
29.73
547.15
42.16
9.86
113.62
148.75
43.40
10.15
40.30
100.13
9.43
34.10
7.98
93.60
375.72
87.89
1,379.21
Payments
Net
Amount
1,054.04
1,502.85
566.38
551.25
549.87
456.40
4,680.79
* SIT is computed in this chart as 12% of FIT
Medicare
1,430.00
2,050.00
680.00
700.00
650.00
550.00
6,060.00
Salary Expense
Ck.
No.
714
715
716
717
718
719
Salary Expense
1,430.00
2,050.00
680.00
700.00
650.00
550.00
6,060.00
Expense
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4/30/2011
Record Payables to Make DR = CR
General Journal
Page 17
Post.
Ref. Debit
Date Description
20-Oct. 14 Salary Expense
Employees' Federal Income Tax Payable
Employees' State Income Tax Payable
FICA Tax Payable
Salaries Payable
Payroll register for week ended October 14.
Credit
6,060.00
817.50
98.10
463.61
4,680.79
Calculate Employer’s Payroll Taxes
Payroll
Taxes
FICA Tax (Employer’s Share)
Social Security Tax
Medicare Tax
FICA Tax (Employer’s Share)
State Unemployment Tax
(Rates Vary)
Federal Unemployment Tax
(Rates Vary)
Taxable
Amount x
%
= Tax
6,060.00 x 6.20% = $375.72
6,060.00 x 1.45% = $87.87
$463.59
900.00 x 5.4%
=
$48.60
900.00 x 0.8%
=
$7.20
Add the Social Security tax
($375.72) + the Medicare tax
($87.87) and record the total
for the FICA Tax ($463.59)
Employer’s Share
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4/30/2011
Record Payroll Expense
and Cash Payments to Employees
General Journal
Date Description
2005
Oct. 14 Salary Expense
Employees' Federal Income Tax Payable
Employees' State Income Tax Payable
FICA Tax Payable
Salaries Payable
Payroll register, page 72, for week ended October 14.
14 Payroll Tax Expense
FICA Tax Payable
SUTA Payable
FUTA Payable
To record employer's share of FICA tax and employer's state and
federal unemployment taxes.
14 Salaries Payable
Cash—Payroll Bank Account
Paid wages for week ended October 14.
Post.
Ref. Debit
6,060.00
519.39
4,680.79
Page 17
Credit
817.50
98.10
463.61
4,680.79
463.59
48.60
7.20
4,680.79
6