0 glencoe accounting unit 3 chapter 13 copyright © by the mcgraw-hill companies, inc. all rights...
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1Glencoe Accounting Unit 3 Chapter 13 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
Unit 3Accounting for a Payroll System
Chapter 12 Payroll Accounting
Chapter 13 Payroll Liabilities and Tax Records
2Glencoe Accounting Unit 3 Chapter 13 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
Analyzing and Journalizing the PayrollEach type of payroll liability is recorded in a separate account.
Journalizing and Posting the Payroll
SECTION 13.1
Type of Deduction Ledger Account
Federal Income Tax
Social Security Tax
Medicare Tax
Hospital Insurance Premiums
3Glencoe Accounting Unit 3 Chapter 13 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
Journalizing and Posting the Payroll
SECTION 13.1
Type of Deduction Ledger Account
Federal Income Tax Employee’s Federal Income Tax Payable
Social Security Tax
Medicare Tax
Hospital Insurance Premiums
4Glencoe Accounting Unit 3 Chapter 13 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
Journalizing and Posting the Payroll
SECTION 13.1
Type of Deduction Ledger Account
Federal Income Tax Employee’s Federal Income Tax Payable
Social Security Tax Social Security Tax Payable
Medicare Tax
Hospital Insurance Premiums
5Glencoe Accounting Unit 3 Chapter 13 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
Journalizing and Posting the Payroll
SECTION 13.1
Type of Deduction Ledger Account
Federal Income Tax Employee’s Federal Income Tax Payable
Social Security Tax Social Security Tax Payable
Medicare Tax Medicare Tax Payable
Hospital Insurance Premiums
6Glencoe Accounting Unit 3 Chapter 13 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
Journalizing and Posting the Payroll
SECTION 13.1
Type of Deduction Ledger Account
Federal Income Tax Employee’s Federal Income Tax Payable
Social Security Tax Social Security Tax Payable
Medicare Tax Medicare Tax Payable
Hospital Insurance Premiums
Hospital Insurance Premiums Payable
7Glencoe Accounting Unit 3 Chapter 13 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
Posting the Payroll EntryAn example follows of the general journal entry and the individual ledger accounts after posting.
Journalizing and Posting the Payroll
SECTION 13.1
8Glencoe Accounting Unit 3 Chapter 13 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
Journalizing and Posting the Payroll
SECTION 13.1
9Glencoe Accounting Unit 3 Chapter 13 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
Journalizing and Posting the Payroll
SECTION 13.1
10Glencoe Accounting Unit 3 Chapter 13 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
Journalizing and Posting the Payroll
SECTION 13.1
11Glencoe Accounting Unit 3 Chapter 13 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
Chapter 13, Section 2Employer’s Payroll Taxes
What Do You Think?
Who shares the earnings tax burden with employees?
12Glencoe Accounting Unit 3 Chapter 13 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
Key Terms Federal Unemployment Tax Act (FUTA) State Unemployment Tax Act (SUTA) unemployment taxes Payroll Tax Expense
Employer’s Payroll TaxesSECTION 13.2
13Glencoe Accounting Unit 3 Chapter 13 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
Computing Payroll Tax ExpensesAn employer must pay taxes on employees’ wages. These taxes include:
the employer’s FICA taxes the federal unemployment tax the state unemployment tax
Employer’s Payroll TaxesSECTION 13.2
14Glencoe Accounting Unit 3 Chapter 13 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
Employer’s Payroll TaxesSECTION 13.2
Demo prob 13-2
& 13-3
15Glencoe Accounting Unit 3 Chapter 13 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
Key Terms Form 8109 Electronic Federal Tax Payment System (EFTPS) Form W-2 Form W-3 Form 941 Form 940
Tax Liability Payments and Tax Reports
SECTION 13.3
16Glencoe Accounting Unit 3 Chapter 13 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
FICA and Federal Income TaxesA business makes a payment combining social security and Medicare taxes and employees’ federal taxes withheld. Form 8109 is sent with the payment to an authorized financial institution or Federal Reserve Bank.
The Electronic Federal Tax Payment System (EFTPS) is used by larger businesses to make deposits.
Tax Liability Payments and Tax Reports
SECTION 13.3
17Glencoe Accounting Unit 3 Chapter 13 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
FICA and Federal Income TaxesBusinesses pay FICA and federal income taxes withheld at regular intervals.
Tax Liability Payments and Tax Reports
SECTION 13.3
18Glencoe Accounting Unit 3 Chapter 13 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
FICA and Federal Income TaxesBusinesses pay FICA and federal income taxes withheld at regular intervals.
Tax Liability Payments and Tax Reports
SECTION 13.3
19Glencoe Accounting Unit 3 Chapter 13 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
FICA and Federal Income Taxes
Tax Liability Payments and Tax Reports
SECTION 13.3
20Glencoe Accounting Unit 3 Chapter 13 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
FICA and Federal Income Taxes
Tax Liability Payments and Tax Reports
SECTION 13.3
21Glencoe Accounting Unit 3 Chapter 13 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
State and Local Income TaxesBusinesses pay state and local income taxes withheld at regular intervals.
Tax Liability Payments and Tax Reports
SECTION 13.3
22Glencoe Accounting Unit 3 Chapter 13 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
State and Local Income TaxesBusinesses pay state and local income taxes withheld at regular intervals.
Tax Liability Payments and Tax Reports
SECTION 13.3
23Glencoe Accounting Unit 3 Chapter 13 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
State and Local Income TaxesBusinesses pay state and local income taxes withheld at regular intervals.
Tax Liability Payments and Tax Reports
SECTION 13.3
24Glencoe Accounting Unit 3 Chapter 13 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
State and Local Income TaxesBusinesses pay state and local income taxes withheld at regular intervals.
Tax Liability Payments and Tax Reports
SECTION 13.3
25Glencoe Accounting Unit 3 Chapter 13 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
Federal Unemployment TaxesMost businesses pay the FUTA tax quarterly, unless it is less then $100 and only an annual payment is needed.
Tax Liability Payments and Tax Reports
SECTION 13.3
26Glencoe Accounting Unit 3 Chapter 13 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
Federal Unemployment TaxesMost businesses pay the FUTA tax quarterly, unless it is less then $100 and only an annual payment is needed.
Tax Liability Payments and Tax Reports
SECTION 13.3
27Glencoe Accounting Unit 3 Chapter 13 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
Federal Unemployment TaxesMost businesses pay the FUTA tax quarterly, unless it is less then $100 and only an annual payment is needed.
Tax Liability Payments and Tax Reports
SECTION 13.3
28Glencoe Accounting Unit 3 Chapter 13 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
Federal Unemployment TaxesMost businesses pay the FUTA tax quarterly, unless it is less then $100 and only an annual payment is needed.
Tax Liability Payments and Tax Reports
SECTION 13.3
29Glencoe Accounting Unit 3 Chapter 13 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
State Unemployment TaxesState unemployment taxes are usually paid quarterly.
Tax Liability Payments and Tax Reports
SECTION 13.3
30Glencoe Accounting Unit 3 Chapter 13 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
State Unemployment TaxesState unemployment taxes are usually paid quarterly.
Tax Liability Payments and Tax Reports
SECTION 13.3
31Glencoe Accounting Unit 3 Chapter 13 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
State Unemployment TaxesState unemployment taxes are usually paid quarterly.
Tax Liability Payments and Tax Reports
SECTION 13.3
32Glencoe Accounting Unit 3 Chapter 13 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
State Unemployment TaxesState unemployment taxes are usually paid quarterly.
Tax Liability Payments and Tax Reports
SECTION 13.3
33Glencoe Accounting Unit 3 Chapter 13 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
Other Payroll LiabilitiesPayments for voluntary deductions are also made.
Tax Liability Payments and Tax Reports
SECTION 13.3
34Glencoe Accounting Unit 3 Chapter 13 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
Other Payroll LiabilitiesPayments for voluntary deductions are also made.
Tax Liability Payments and Tax Reports
SECTION 13.3
35Glencoe Accounting Unit 3 Chapter 13 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
Other Payroll LiabilitiesPayments for voluntary deductions are also made.
Tax Liability Payments and Tax Reports
SECTION 13.3
36Glencoe Accounting Unit 3 Chapter 13 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
Other Payroll LiabilitiesPayments for voluntary deductions are also made.
Tax Liability Payments and Tax Reports
SECTION 13.3
37Glencoe Accounting Unit 3 Chapter 13 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
Posting the Payment of Payroll LiabilitiesThis is an example of the individual ledger accounts after posting.
Tax Liability Payments and Tax Reports
SECTION 13.3
38Glencoe Accounting Unit 3 Chapter 13 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
Tax Liability Payments and Tax Reports
SECTION 13.3
39Glencoe Accounting Unit 3 Chapter 13 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
Tax Liability Payments and Tax Reports
SECTION 13.3
40Glencoe Accounting Unit 3 Chapter 13 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
Preparing Payroll Tax FormsEmployers complete a variety of payroll-related tax forms.
Tax Liability Payments and Tax Reports
SECTION 13.3
41Glencoe Accounting Unit 3 Chapter 13 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
Forms W-2 and W-3Form W-2 is the Wage and Tax Statement and summarizes an employee’s earnings and withholdings for the calendar year. Form W-3 is the Transmittal of Wage and Tax Statements and summarizes the information from Forms W-2.
Tax Liability Payments and Tax Reports
SECTION 13.3
42Glencoe Accounting Unit 3 Chapter 13 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
Form W-2
Tax Liability Payments and Tax Reports
SECTION 13.3
43Glencoe Accounting Unit 3 Chapter 13 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
Form W-3
Tax Liability Payments and Tax Reports
SECTION 13.3
44Glencoe Accounting Unit 3 Chapter 13 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
Forms 941 and 940Form 941 is the employer’s quarterly federal tax return and reports accumulated amounts of FICA and federal income taxes withheld from employees’ earnings and FICA taxes owed by the employer.
Form 940 is used to report the employer’s federal unemployment tax.
Tax Liability Payments and Tax Reports
SECTION 13.3
45Glencoe Accounting Unit 3 Chapter 13 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
Key Terms Review Form 8109
Federal Deposit Tax Coupon; form sent with payment for FICA and federal income taxes or federal unemployment taxes.
Electronic Federal Tax Payment System (EFTPS)
System used by large businesses to deposit tax payments by electronic funds transfer.
Form W-2
Wage and Tax Statement; form that summarizes an employee’s earnings and amounts withheld for federal, state, and local taxes.
Tax Liability Payments and Tax Reports
SECTION 13.3
46Glencoe Accounting Unit 3 Chapter 13 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
Key Terms Review Form W-3
Transmittal of Wage and Tax Statements; summarizes the information contained on the employees’ Forms W-2 and accompanies the Forms W-2 sent to the federal government.
Form 941
Employer’s Quarterly Federal Tax Return; form used to report accumulated amounts of FICA and federal income tax withheld from employees’ earnings for the quarter, as well as FICA tax owed by the employer.
Tax Liability Payments and Tax Reports
SECTION 13.3
47Glencoe Accounting Unit 3 Chapter 13 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
Key Terms Review Form 940
Form that reports the employer’s federal unemployment taxes.
Tax Liability Payments and Tax Reports
SECTION 13.3