lesson 13-2 recording employer payroll taxes. payment of taxes to government two types of taxes paid...
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PAYMENT OF TAXES TO PAYMENT OF TAXES TO GOVERNMENTGOVERNMENT
Two Types of Taxes paid1. Salary Taxes and Deductions
Taxes & deductions you make on employee’s behalf – employee really is paying, business collects and sends to the government for employee.
2. Payroll Taxes: taxes the business owes Four taxes employers owe to government?
Social Security Tax Medicare Tax Federal Unemployment tax State Unemployment tax
Federal Income, Social Security, and Medicare Taxes
Health, Bonds, and United Way
UNEMPLOYMENT TAXUNEMPLOYMENT TAX
Social Security Tax: Fund for elderly, survivors, or disabled 6.2% of employee’s gross earnings (match)
Medicare Tax Medical coverage for the elderly age 65 or older 1.45 of employee’s gross earnings (match)
UNEMPLOYMENT TAXUNEMPLOYMENT TAX
Unemployment tax Paid by business (not employees) Required per Federal Unemployment Insurance laws Pays workers benefits for limited periods of unemployment
Two steps to figure unemployment tax1. Determine the Unemployment taxable earnings amount
Only the first $7000 of total earnings are subject to tax
2. Calculate two types of Unemployment tax for all employees Federal Unemployment tax = .8% of earnings up to $7000 (accumulated)
State Unemployment tax = 5.4% of earnings up to $7000 (accumulated)
UNEMPLOYMENT TAXABLE EARNINGSUNEMPLOYMENT TAXABLE EARNINGS
1. Enter accumulated earnings from Previous Pay Period
2. Enter total earnings for this pay period
3. Determine amount of Unemployment Taxable Earnings
4. Total the Unemployment Taxable Earnings For all Employees.
EARINGS RECORD FOR QUARTER ENDED December 31, 2010
Employee No: 3 Selby Rick EMARITAL STATUS M
Withholding Allowances 4
LAST NAME FIRST NAME MIDDLE
Rate of Pay 12.00 Social Security Number: 450-70-6432
Position Sales Clerk
Pay Period Earnings DeductionsNet Pay
AccumulatedEarnings
Ended RegularOvertim
e TotalFederal
Income TaxSoc. Sec.
Tax
Medicare
TaxHealth
Insurance Other Total
18,432.00
10/15/2009 960.00 90.001050.0
0 20.00 65.10 15.23 60.00B 20.00
180.33
869.67
19,482.00
10/31/2009 1152.00 1152.0
0 30.00 71.42 16.70 60.00 20.00
198.12
953.88
20,634.00
11/15/2009 1056.00 1056.0
0 20.00 65.47 15.31 60.00 20.00
180.78
875.22
21,690.00
11/30/2009 1056.00 1056.0
0 20.00 65.47 15.31 60.00 20.00
180.78
875.22
22,746.00
12/15/2009 1056.00 81.001137.0
0 28.00 70.49 16.49 60.00 20.00
194.98
942.02
23,883.00
QuarterlyTotals
6
FederalUnemployment
Tax=
FederalUnemployment
Tax Rate×
UnemploymentTaxableEarnings
StateUnemployment
Tax=
StateUnemployment
Tax Rate×
UnemploymentTaxableEarnings
UNEMPLOYMENT TAXESUNEMPLOYMENT TAXES
$6.32=0.008×$790.00
$42.66=.054×$790.00
JOURNALIZING PROCESSJOURNALIZING PROCESS
1. Record & Pay Employee Payroll Taxes (Lesson 1) Pay taxes Employee owes = Salary Expense
2. Record Business/Employer Payroll Taxes Pay Taxes the Employer Owes = Payroll Tax Expense (Dr) Social Security 6.2% - What account? (CR) Medicare 1.45% - What Account? (CR) Federal Unemployment .8% - What Account? (Cr) State Unemployment 5.4% - What Account? (Cr)
Are we paying these right now or later?
What journal will we use?
No Cash Payment, therefore must use the general journal
TAXES TOGETHERTAXES TOGETHER
Payroll Tax Expense = taxes the business owes Does Payroll Tax Expense increase as a Debit or Credit? How much is each payroll tax?
Payroll Tax Exp. Social Security Tax Pay: Medicare Tax Pay: Federal Unemployment tax Pay: State Unemployment tax Pay :
485.92
354.11
82.83
6.32
42.66
Debit
Federal Unemployment tax: 6.32
State Unemployment tax: 42.66
9JOURNALIZING EMPLOYER JOURNALIZING EMPLOYER PAYROLL TAXESPAYROLL TAXES
December 15. Recorded (not paid) employer payroll taxes expense, $485.92, for the semimonthly pay period ended December 15. Taxes owed are: social security tax, $354.11; Medicare tax, $82.83; federal unemployment tax, $6.32; state employment tax, $42.66. Memorandum No. 63.
Journalize Transaction: What Journal will you use?
JOURNALIZING EMPLOYER JOURNALIZING EMPLOYER PAYROLL TAXESPAYROLL TAXES
10
1122
33
55
44
66
4. Enter the debit amount.
1. Enter the date.
5. Enter each payable account
2. Enter expense account debited.
6. Enter the credit amounts.
3. Enter the memorandum number.
General Journal Page #
Date Account Title Doc No.
Post. Ref Debit Credit
December 15th Memorandum 63
Total Payroll Exp:
Social Security Tax: $354.11
Medicare Tax: 82.83
Federal Unemployment tax: 6.32
State Unemployment tax: 42.66
13
500068577509486150006350
Calculate the Tax Amounts:
Total Payroll Exp:
Social Security Tax:
Medicare Tax: Federal
Unemployment tax: State Unemployment tax: