4/30/2011
Chapter 9
Employer Taxes,
Payments, and
Reports
American Payroll Association
• Professional
association for over
22,000 payroll
professionals
• Provides National
Payroll Week Survey
• Training, certification,
compliance updates,
networking
opportunities for
members
Copyright © Houghton Mifflin Company. All rights reserved.
© Royalty Free PhotoDisc Blue/ Getty Images
9|2
1
4/30/2011
Performance Objectives
1. Calculate the amount of payroll tax expense and
journalize the entry.
2. Journalize the entry for the deposit of employees’
federal income taxes withheld and FICA taxes (both
employees’ withheld and employer’s matching
share) and prepare the deposit coupon.
3. Journalize the entries for the payment of
employer’s state and federal unemployment taxes.
4. Journalize the entry for the deposit of employees’
state income taxes withheld.
Copyright © Houghton Mifflin Company. All rights reserved.
9|3
Performance Objectives (cont’d)
5. Complete Employer’s Quarterly Federal Tax
Return, Form 941.
6. Prepare W-2 and W-3 forms and Form 940.
7. Calculate the premium for workers’ compensation
insurance, and prepare the entry for payment in
advance.
8. Determine the amount of the end-of-the-year
adjustments for (a) workers’ compensation
insurance and (b) accrued salaries and wages, and
record the adjustments.
Copyright © Houghton Mifflin Company. All rights reserved.
9|4
2
4/30/2011
Chapters 8 and 9: Overview
• Chapter 8
– Withhold employees’ taxes.
– Create liabilities (payables).
• Chapter 9
– Pay off those liabilities.
– Calculate and pay employer taxes.
Copyright © Houghton Mifflin Company. All rights reserved.
9|5
Performance Objective 1
Calculate the amount
of payroll tax expense
and journalize the
entry.
© Royalty-Free/Digital Vision
Copyright © Houghton Mifflin Company. All rights reserved.
9|6
3
4/30/2011
Employer Identification Number
• The number assigned
each employer by the
Internal Revenue Service
• Used to submit reports
and payments for FICA
taxes and federal income
tax withheld
• Listed on all deposit slips
• Individuals have Social
Security numbers.
• Employers have
employer identification
number.
• IRS uses both numbers
to track taxes.
• The IRS assigns EIN
numbers in the following
format: XX-XXXXXXX.
Copyright © Houghton Mifflin Company. All rights reserved.
9|7
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
Copyright © Houghton Mifflin Company. All rights reserved.
9|8
4
4/30/2011
Payroll Tax Components
• FICA tax (employer’s share)
– Calculate Social Security amount (using 6.2%,
$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
Copyright © Houghton Mifflin Company. All rights reserved.
9|9
Calculate Payroll Tax Expense
• Take taxable amounts directly from payroll
register:
– FICA tax (employer’s share)
– State unemployment tax (varies by state)
– Federal unemployment tax
Copyright © Houghton Mifflin Company. All rights reserved.
9 | 10
5
4/30/2011
SUTA
FUTA
FICA
Do not use calculated
amounts from
employee’s deductions.
You must take totals
and recalculate
amounts. (As a result,
there may be rounding
differences.)
(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
Copyright © Houghton Mifflin Company. All rights reserved.
9 | 11
Journalize Payroll Tax Expense Entry
• Payroll taxes are an expense of doing business.
• Debit Payroll Tax Expense.
• Credit associated payable account.
General Journal
Date
20-Oct.
Description
7 Payroll Tax Expense
FICA Tax Payable
State Unemployment Tax Payable
Federal Unemployment Tax Payable
To record employer's share of FICA tax and
employer's state and federal unemployment taxes.
Copyright © Houghton Mifflin Company. All rights reserved.
Page 9
Post.
Ref.
Debit
1,490.72
Credit
1,431.31
51.74
7.67
9 | 12
6
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
-
+
Copyright © Houghton Mifflin Company. All rights reserved.
9 | 13
T Accounts: Employer’s FICA
Payroll Tax Expense
DR
CR
+
1,431.31
-
FICA Tax Payable
DR
CR
-
+
1,431.33
1,431.31
State Unemployment Tax Payable
DR
CR
-
+
Federal Unemployment Tax Payable
DR
CR
-
Copyright © Houghton Mifflin Company. All rights reserved.
+
9 | 14
7
4/30/2011
T Accounts: Employer’s SUTA
Payroll Tax Expense
DR
CR
+
1,431.31
51.74
-
FICA Tax Payable
DR
CR
-
+
1,431.33
1,431.31
State Unemployment Tax Payable
DR
CR
-
+
51.74
Federal Unemployment Tax Payable
DR
CR
-
+
Copyright © Houghton Mifflin Company. All rights reserved.
9 | 15
T Accounts: Employer’s FUTA
Payroll Tax Expense
DR
CR
+
1,431.31
1,206.22
51.74
7.67
-
FICA Tax Payable
DR
CR
-
+
1,431.33
1,431.31
State Unemployment Tax Payable
DR
CR
-
+
51.74
Federal Unemployment Tax Payable
DR
CR
-
+
7.67
Copyright © Houghton Mifflin Company. All rights reserved.
9 | 16
8
4/30/2011
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
State Unemployment Tax Payable
DR
CR
-
+
51.74
Total Payroll Tax
Expense, journalized
and posted
Federal Unemployment Tax Payable
DR
CR
-
+
7.67
Copyright © Houghton Mifflin Company. All rights reserved.
9 | 17
Based on Payroll Register, Make Journal
Entry for Employee Salaries and Wages Expense
General Journal
Date
20-Oct.
Description
7 Sales Wages Expense
Office Wages Expense
Employees' Federal Income Tax Payable
FICA Tax Payable
Employees' State Income Tax Payable
Employees' Medical Insurance Payable
Employees' United Way Payable
Accounts Receivable
Wages Payable
Page 9
Post.
Ref.
Debit
Credit
14,332.15
4,467.28
2,838.00
1,431.33
567.60
320.70
185.00
30.00
13,426.80
Payroll Register, page 56, for week ended October 7.
Page 299
Copyright © Houghton Mifflin Company. All rights reserved.
9 | 18
9
4/30/2011
From Taxable Earnings Columns of Payroll Register,
Calculate and Journalize Payroll Tax Expense
General Journal
Date
Description
20-Oct.
7 Payroll Tax Expense
FICA Tax Payable
State Unemployment Tax Payable
Federal Unemployment Tax Payable
To record employer's share of FICA tax and
employer's state and federal unemployment taxes.
Page 9
Post.
Ref.
Debit
Credit
1,490.72
1,431.31
51.74
7.67
Page 299
Copyright © Houghton Mifflin Company. All rights reserved.
9 | 19
Journalize Cash Payments to Employees
General Journal
Date
20-Oct.
Description
8 Wages Payable
Cash—Payroll Bank Account
Paid wages for week ended October 7.
Page 11
Post.
Ref.
Debit
Credit
13,426.80
13,426.80
Page 300
Copyright © Houghton Mifflin Company. All rights reserved.
9 | 20
10
4/30/2011
Performance Objective 2
Journalize the entry for the deposit of employees’
federal income taxes withheld and FICA taxes
(both employees’ withheld and employer’s
matching share) and prepare the deposit coupon.
© Royalty Free C Squared Studios/ Getty Images
Copyright © Houghton Mifflin Company. All rights reserved.
9 | 21
Federal Tax Deposits
• Include combined total of:
1. Employees’ federal income taxes withheld
2. Employees’ FICA taxes withheld
3. Employer’s share of FICA taxes
• Made to authorized commercial or Federal
Reserve banks and forwarded to U.S. Treasury
• Timing depends on amounts owed (the more
you owe, the more often you pay)
Copyright © Houghton Mifflin Company. All rights reserved.
9 | 22
11
4/30/2011
Prepare the Deposit Coupon
Page 301
Copyright © Houghton Mifflin Company. All rights reserved.
9 | 23
Journal Entry for Payments of FICA
and Federal Income Tax Withholdings
• Reduces payables
(liabilities)
• Reduces Cash
• Leaves payable accounts
with zero balances after
posting
• This example company
pays taxes semi-weekly
FICA Tax Payable
DR
5,725.32
5,725.32
0.00
Employees' Federal Income Tax Payable
DR
-
General Journal
Date
Description
20-Oct.
15 Employees' Federal Income Tax Payable
FICA Tax Payable
Cash
Issued check for federal tax deposit, Bangor Bank.
Copyright © Houghton Mifflin Company. All rights reserved.
CR
+
CR
+
5,676.00
5,676.00
0.00
Page 3
Post.
Ref.
Debit
5,676.00
5,725.32
Credit
11,401.32
9 | 24
12
4/30/2011
Performance Objective 3
Journalize the entries
for the payment of
employer’s state and
federal unemployment
taxes
• SUTA
• FUTA
© Royalty Free C Squared Studios/ Getty Images
Copyright © Houghton Mifflin Company. All rights reserved.
9 | 25
Payments of State
Unemployment Tax (SUTA)
• Usually paid quarterly
• Due by the end of the month
following the end of the
quarter (same as Form 941)
• After posting, the payable
account has a zero balance.
• Journal entry looks like this:
State Unemployment Tax Payable
DR
CR
+
3,257.55
3,257.55
0.00
(p. 302)
General Journal
Date Description
20-April
30 State Unemployment Tax Payable
Cash
Issued check for payment of state unemployment
tax.
Copyright © Houghton Mifflin Company. All rights reserved.
Page 17
Post.
Ref.
Debit
3,257.55
Credit
3,257.55
9 | 26
13
4/30/2011
Payments of Federal
Unemployment Tax (FUTA)
• Calculated quarterly (due
dates same as form 941)
– If liability > $100, funds are
submitted with deposit card.
• After posting, the payable
account has a zero balance.
• Journal entry looks like this:
Federal Unemployment Tax Payable
DR
CR
+
482.60
482.60
0.00
General Journal
Date
Page 17
Post.
Ref.
Description
20-April
30 Federal Unemployment Tax Payable
Cash
Issued check for deposit of federal unemployment
tax.
Debit
Credit
482.60
482.60
(p. 303)
Copyright © Houghton Mifflin Company. All rights reserved.
9 | 27
Performance Objective 4
Journalize the entry
for the deposit of
employees’ state
income taxes withheld.
© Royalty-Free/Photodisc Blue
Copyright © Houghton Mifflin Company. All rights reserved.
9 | 28
14
4/30/2011
Deposits of Employees’
State Income Tax Withholding
• Deposited quarterly (due
dates same as SUTA)
• After posting, the payable
account has a zero balance
• Journal entry looks like this:
General Journal
Date
Description
20-April
30 Employees’ State Income Tax Payable
Cash
Issued check for state income tax deposit.
State Income Tax Payable
DR
CR
+
1,674.10
1,674.10
0.00
Page 17
Post.
Ref.
Debit
Credit
1,674.10
1,674.10
(p. 304)
Copyright © Houghton Mifflin Company. All rights reserved.
9 | 29
Performance Objective 5
Complete Employer’s Quarterly Federal Tax
Return, Form 941.
© Royalty-Free/Photodisc Blue
Copyright © Houghton Mifflin Company. All rights reserved.
9 | 30
15
4/30/2011
Form 941 (Employer’s
Quarterly Federal Tax Return)
• A quarterly report showing the tax liability for
withholdings of employees’ federal income tax
and FICA taxes and the employer’s share of
FICA taxes; total tax deposits made in the
quarter are also listed on Form 941
• Due April 30, July 31, October 31, January 31
• See textbook for example, page 305.
• Homework Problem 9-3A is a 941 form to fill out.
Copyright © Houghton Mifflin Company. All rights reserved.
9 | 31
Performance Objective 6
Prepare W-2 and W-3 forms and Form 940.
© Royalty-Free/Photodisc Blue
Copyright © Houghton Mifflin Company. All rights reserved.
9 | 32
16
4/30/2011
Form W-2 (Wage and Tax Statement)
• Form containing information about employee earnings
and tax deductions for the year
• After last day of calendar year, employer must complete
and furnish employee with at least two copies (before
January 31)
• One copy to the Social Security Administration
• One copy to state (if appropriate)
• Two or more copies to employee for:
– Employee’s records
– Employee to send to IRS
– Employee to send to state and local tax agencies if
those taxes withheld
• One copy for employer’s records
Copyright © Houghton Mifflin Company. All rights reserved.
9 | 33
Form W-2
(p. 307)
Copyright © Houghton Mifflin Company. All rights reserved.
9 | 34
17
4/30/2011
Form W-3 (Transmittal of
Wage and Tax Statements)
• Annual report (due Feb. 28) sent to Social
Security Administration listing:
– Total wages and tips
– Total federal income taxes withheld
– Total Social Security and Medicare taxable wages
and taxes withheld
• Must attach Copy A of employees’ W-2 forms
• Total amounts must match grand total of W-2
and four quarterly 941 forms
Copyright © Houghton Mifflin Company. All rights reserved.
9 | 35
Form W-3 (page 309)
Copyright © Houghton Mifflin Company. All rights reserved.
9 | 36
18
4/30/2011
Form 940 (Employer’s Annual
Federal Unemployment Tax Return)
• Due Jan. 31, or Feb. 10 if payments made in full
• Lists:
–
–
–
–
Total wages paid to employees
Total wages subject to federal unemployment tax
Total federal unemployment tax
Other information
Copyright © Houghton Mifflin Company. All rights reserved.
9 | 37
Form 940-EZ
(p. 311)
Copyright © Houghton Mifflin Company. All rights reserved.
9 | 38
19
4/30/2011
Performance Objective 7
Calculate the premium for workers’ compensation
insurance, and prepare the entry for payment in
advance.
© Royalty Free PhotoDisc Blue/ Getty Images
Copyright © Houghton Mifflin Company. All rights reserved.
9 | 39
Workers’ Compensation Insurance
• Workers’ compensation insurance provides
benefits for employees injured or killed on
the job.
• Rates vary according to the degree of
risk inherent in the job.
• Plans may be sponsored by states or by private
firms.
• Employer pays premium in advance, based on
estimated payroll for the year.
• Rates are adjusted after exact payroll is known.
Copyright © Houghton Mifflin Company. All rights reserved.
9 | 40
20
4/30/2011
Calculate the Premium in Advance
Classification
Office Work
Sales Work
Predicted Payroll
$182,000
660,000
Rate (Percent)
0.15
0.50
Estimated Premium
$182,000 x .0015 =
$
273.00
$660,000 x .0050 =
3,300.00
Total estimated premium $ 3,573.00
(p. 312)
Copyright © Houghton Mifflin Company. All rights reserved.
9 | 41
Prepare the Entry
for Payment in Advance
(p. 312)
Copyright © Houghton Mifflin Company. All rights reserved.
9 | 42
21
4/30/2011
Calculate Exact
Premium at End of Year
Classification
Office Work
Sales Work
Actual Payroll
$188,990
672,540
Rate (Percent)
0.15
0.50
Estimated Premium
$188,990 x .0015 =
$ 283.49
$672,540 x .0050 =
3,362.70
Total estimated premium
$3,646.19
(p. 313)
Copyright © Houghton Mifflin Company. All rights reserved.
9 | 43
Performance Objective 8a
Determine the amount of the end-of-the-year
adjustment for worker’s compensation insurance,
and record the adjustment.
© Royalty Free PhotoDisc Blue/ Getty Images
Copyright © Houghton Mifflin Company. All rights reserved.
9 | 44
22
4/30/2011
Calculate Unpaid
Premium and Make Adjusting Entry
$3,646.19 Total exact premium
3,573.00 Less total estimated premium paid
$
73.19 Additional premium owed
(p. 313)
Copyright © Houghton Mifflin Company. All rights reserved.
9 | 45
Performance Objective 8b
Determine the amount of
the end-of-the-year
adjustment for accrued
salaries and wages, and
record the adjustment.
© Royalty Free PhotoDisc Blue/ Getty Images
Copyright © Houghton Mifflin Company. All rights reserved.
9 | 46
23
4/30/2011
Accrued Salaries and Wages
• Are there adjusting entries for wages expense
and wages payable?
– Yes, salaries and wages accrue between the last
payday and the end of the year.
• Are there adjusting entries for FICA, federal
income tax withholdings, or payroll taxes?
– No.
– These taxes are not legal obligations until employees
are paid.
Copyright © Houghton Mifflin Company. All rights reserved.
9 | 47
Accrued Salaries and Wages (cont’d)
Assume $1,200 of salaries accrue for the time
between the last payday and the end of the year.
(p. 314)
General Journal
Date
Description
20-Dec.
31 Salary Expense
Salaries Payable
Page 11
Post.
Ref.
Debit
Credit
1,200.00
1,200.00
There is no adjusting entry for Payroll Tax Expense because
there is no legal liability.
Copyright © Houghton Mifflin Company. All rights reserved.
9 | 48
24
4/30/2011
Internet Research: IRS
• Find the IRS website.
• Locate the section called “Businesses with
Employees.”
• How long does the IRS require businesses to
keep employment tax records?
• What are employers required to do when they
hire a new employee?
Employers must keep employment tax records for 4 years.
They are required to verify that the employee is legally
eligible to work in the United States. Employees fill out
Form I-9, Employment Eligibility Verification, and Form
W-4, Employee’s Withholding Allowance Certificate.
Copyright © Houghton Mifflin Company. All rights reserved.
9 | 49
Review Question
Q. What is contained on a Form W-3?
A. Total wages and tips; total federal income
taxes withheld; total Social Security and
Medicare taxable wages and taxes withheld
Copyright © Houghton Mifflin Company. All rights reserved.
9 | 50
25
4/30/2011
Review Question
Q. Which tax report reflects the tax liability for
withholdings of employees’ federal income
tax, FICA taxes, and the employer’s share
of FICA taxes?
A. Form 941
Copyright © Houghton Mifflin Company. All rights reserved.
9 | 51
Review Question
Q. When are SUTA taxes usually due?
A. Usually paid quarterly; due by the end of the
month following the end of the quarter
Copyright © Houghton Mifflin Company. All rights reserved.
9 | 52
26
4/30/2011
Review Question
Q. What adjusting entry is made at year-end for
accrued payroll taxes?
A. No entry; no legal obligation exists
Copyright © Houghton Mifflin Company. All rights reserved.
9 | 53
Review Question
Q. When making a federal tax deposit, what three
types of taxes are usually contained?
A. Employees’ federal income taxes withheld;
employees’ FICA taxes withheld; and
employer’s share of FICA taxes
Copyright © Houghton Mifflin Company. All rights reserved.
9 | 54
27
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. Week's Earnings Unemployment
UE Max
84,500.00
1,430.00
$7,000.00
86,000.00
2,050.00
Fed Rate
56,900.00
680.00
0.008
43,690.00
700.00
State Rate
5,255.00
650.00
550.00
0.054
6,750.00
FICA
FICA
SS Max
Medicare Max
$94,200.00
SS Rate
M Rate
6.20%
1.45%
0
0
0
0
Copyright © Houghton Mifflin Company. All rights reserved.
9 | 55
Look to Beginning Earnings to Determine
If There Are Taxable Earnings
Name
Chin, Sue
Chueng, Vicky
Girvin, M. A.
Ho, Dennis
Pham, H. L.
Smith, J. C.
Totals
Beginning
Cumulative
Earnings
84,500.00
86,000.00
56,900.00
43,690.00
5,255.00
6,750.00
283,095.00
Total
1,430.00
2,050.00
680.00
700.00
650.00
550.00
6,060.00
Copyright © Houghton Mifflin Company. All rights reserved.
Ending
Cumulative
Earnings
0.00
Unemployment
0.00
Taxable Earnings
Social
Security
0.00
Medicare
0.00
9 | 56
28
4/30/2011
Calculate Ending Cumulative Earnings
Name
Chin, Sue
Chueng, Vicky
Girvin, M. A.
Ho, Dennis
Pham, H. L.
Smith, J. C.
Totals
Beginning
Cumulative
Earnings
84,500.00
86,000.00
56,900.00
43,690.00
5,255.00
6,750.00
283,095.00
Payroll Register for Week Ended Oct. 14, 20-Ending
Taxable Earnings
Cumulative
Social
Total
Earnings
Unemployment
Security
1,430.00
85,930.00
88,050.00
2,050.00
680.00
57,580.00
44,390.00
700.00
5,905.00
650.00
550.00
7,300.00
6,060.00
289,155.00
0.00
0.00
Copyright © Houghton Mifflin Company. All rights reserved.
Medicare
0.00
9 | 57
Calculate Taxable Earnings
Name
Chin, Sue
Chueng, Vicky
Girvin, M. A.
Ho, Dennis
Pham, H. L.
Smith, J. C.
Totals
Beginning
Cumulative
Earnings
84,500.00
86,000.00
56,900.00
43,690.00
5,255.00
6,750.00
283,095.00
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
Copyright © Houghton Mifflin Company. All rights reserved.
Medicare
1,430.00
2,050.00
680.00
700.00
650.00
550.00
6,060.00
9 | 58
29
4/30/2011
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
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
Ck.
No.
714
715
716
717
718
719
Payables
Medicare
1,430.00
2,050.00
680.00
700.00
650.00
550.00
6,060.00
Salary Expense
Salary Expense
1,430.00
2,050.00
680.00
700.00
650.00
550.00
6,060.00
Expense
Copyright © Houghton Mifflin Company. All rights reserved.
9 | 59
Record Salary Expense
General Journal
Date Description
20-Oct. 14 Salary Expense
Copyright © Houghton Mifflin Company. All rights reserved.
Page 17
Post.
Ref. Debit
Credit
6,060.00
9 | 60
30
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
Copyright © Houghton Mifflin Company. All rights reserved.
9 | 61
Calculate Payroll Taxes
Payroll
Taxable
Taxes
Amount
FICA Tax (Employer’s Share)
6,060.00
Social Security Tax
Medicare Tax
6,060.00
FICA Tax (Employer’s Share)
State Unemployment Tax
(Rates Vary)
900.00
Federal Unemployment Tax
(Rates Vary)
900.00
Copyright © Houghton Mifflin Company. All rights reserved.
x
%
= Tax
x 6.20% = $375.72
x 1.45% = $87.87
$463.59
x 5.4% =
$48.60
x 0.8% =
$7.20
9 | 62
31
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.
Page 17
Post.
Ref. Debit
Credit
6,060.00
519.39
4,680.79
817.50
98.10
463.61
4,680.79
463.59
48.60
7.20
4,680.79
Copyright © Houghton Mifflin Company. All rights reserved.
9 | 63
Chapter Review
1. Calculate the amount of payroll tax expense
and journalize the entry.
2. Journalize the entry for the deposit of
employees’ federal income taxes withheld and
FICA taxes (both employees’ withheld and
employer’s matching share) and prepare the
deposit coupon.
3. Journalize the entries for the payment of
employer’s state and federal unemployment
taxes.
Copyright © Houghton Mifflin Company. All rights reserved.
9 | 64
32
4/30/2011
Chapter Review (cont’d)
4. Journalize the entry for the deposit of
employees’ state income taxes withheld.
5. Complete Employer’s Quarterly Federal Tax
Return, Form 941.
6. Prepare W-2 and W-3 forms and Form 940.
Copyright © Houghton Mifflin Company. All rights reserved.
9 | 65
Chapter Review (cont’d)
7. Calculate the premium for workers’
compensation insurance, and prepare the
entry for payment in advance.
8. Determine the amount of the end-of-the-year
adjustments for (a) worker’s compensation
insurance and (b) accrued salaries and wages,
and record the adjustments.
Copyright © Houghton Mifflin Company. All rights reserved.
9 | 66
33