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Chapter 12
Preparing Payroll Records
In Chapter 12
You will learn:• Define accounting terms related to payroll records.
• Identify accounting practices related to payroll records.
• Complete a payroll time card.
• Calculate payroll taxes.
• Complete a payroll register and an employee earnings record.
• Prepare payroll checks.
Reporting Current and Non-Current Liabilities
Current Liabilities are debts that will be
settled within the next year
Long-term Liabilities are debts that will NOT be settled
within the next year
Payroll related liabilities
I worked 40 hours this week. My hourly rate
is $12.50.
I’ll take your time sheet and you’ll get your
check on Friday
I wonder how much my
check will be
5 LESSON 12-1
4. Add the Hours column.
CALCULATING EMPLOYEE HOURS WORKED page 342
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3. Add Hours Reg and Hours OT columns and
enter the totals.
2. Calculate the number of overtime hours and enter the amounts.
1. Calculate the number of regular hours for each
day and enter the amounts.
6 LESSON 12-1
CALCULATING EMPLOYEE TOTAL EARNINGS page 343
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1. Enter the rate for regular time in the Rate column.
2. Calculate the regular earnings. Enter the amount.
3. Enter the rate for overtime.
4. Calculate the overtime earnings. Enter the amount.
5. Add the Amount column to calculate total earnings. Enter the amount of total
earnings.
Gross Pay
Where does your paycheck go?
8 LESSON 12-2
EMPLOYEE’S WITHHOLDING ALLOWANCE CERTIFICATE
112233
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page 346
1. Write the employee’s name and address2. Write the employee’s social security number.3. Check the appropriate marital status block.
4. Write the total number of withholding allowances claimed.5. The employee signs and dates the form.
9 LESSON 12-2
EMPLOYEE’S INCOME TAX WITHHOLDING – MARRIED PERSONS page 348
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1. Select the appropriate table.
2. Locate the employee’s total earnings.
3. Intersection of wages and number of allowances column.
Payday!
Think about your pay stub….
Gross Pay
FIT FICA-SS
FICA – Med
Other Net Pay
Gross Pay = # of hours worked at hourly rate
40 hours @ $12.50$500.00
FIT = Federal Income Tax Withholding The amount is determined based on the employee’s wages,
marital status and number of dependents
Assume 20%
20% of $500 =$100.00
FICA (SS) = Social Security Taxes withheld. This amount is 6.2% of gross wages
$500 * 6.2%$31.00
FICA (Med) = Medicare Taxes withheld. This amount is 1.45% of gross wages
$500 * 1.45%$7.25
As authorized
Other Employee-Authorized deductions to include: Health Insurance, Union Dues, 401k contributions,
gifts to charity
Gross Pay – FIT – FICA – Medicare = Net Pay
$500.00 - $100.00 - $31.00 - $7.25 = $361.75
$361.75
Journal Entry for Salaries Expense
Gross Pay
FIT FICA-SS
FICA – Med
Other Net Pay
Debit Salaries Expense$500.00
Credit FIT Payable$100.00
Credit FICA
Payable$31.00
Credit Medicare Payable$7.25
Credit Other
Payables
Credit Cash$361.75
Employer Payroll Tax Expense
In addition to the Gross Pay, the employer is responsible for:
o Matching amounts for Social Security and Medicare
o State and Federal Unemployment Taxes
o Other State and Local taxes
$7.25
Employer’s Payroll Tax Expense
Gross Pay
FIT FICA-SS
FICA – Med
Other Net Pay
Debit Salaries Expense$500.00
Credit FIT Payable$100.00
Credit Other
Payables
Credit Cash$361.75$31.00
Amounts withheld from Employees
$7.25Matched by Employer$31.00
Matched by Employer$7.25
Paid to the Governmental Agency
Total Withheld .Total Withheld plus Employer’s Tax is paid to Governmental Agency
+ Employer Match
15 LESSON 12-3
PAYROLL REGISTER
77 88 99 1010 1111
1212
page 351
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8. Health insurance premium deductions2. Payment date
3. Employee personal data9. Other employee payroll deductions
4. Earnings10. Total deductions
5. Federal income tax withheld11. Net pay
6. Social security tax withheld12. Total, prove, and rule
7. Medicare tax withheld13. Check number
1. Pay period date
16 LESSON 12-3
EMPLOYEE EARNINGS RECORDS page 353
7. Total and prove
5. Earnings, deductions,
net pay
2. Employee personal data
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1. Last day of quarter
4. Pay period
3. Beginning accumulated
earnings
6. Updated accumulated
earnings
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17 LESSON 12-4
PAYROLL BANK ACCOUNT
1. Prepare the check stub.
page 356
2. Prepare the check.
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18 LESSON 12-4
EMPLOYEE’S PAYROLL CHECK page 357
1. Prepare the check stub of each employee’s payroll check.
2. Prepare each employee’s payroll check.
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End – Chapter 12
Chapter 13
Payroll Accounting, Taxes and Reports
21 LESSON 13-1
REMEMBER THE PAYROLL REGISTER page 369
22 LESSON 13-1
ANALYZING PAYMENT OF A PAYROLL page 370
23 LESSON 13-1
6. Write the titles of accounts credited.
JOURNALIZING PAYMENT OF A PAYROLL
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page 371
December 15. Paid cash for payroll, $4,609.46. Check No. 335.
771. Write the date.
2. Write the title of the account debited.
3. Write the check number.
4. Write the account debited. 7. Write the amounts credited.
5. Write the total amount paid to employees.
24 LESSON 13-2
UNEMPLOYMENT TAXABLE EARNINGS
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page 374
111. Enter accumulated earnings and total earnings for each employee.
2. Enter unemployment taxable earnings.
3. Total the Unemployment Taxable Earnings column.
25
LESSON 13-2
FederalUnemployment
Tax=
FederalUnemployment
Tax Rate×
UnemploymentTaxableEarnings
StateUnemployment
Tax=
StateUnemployment
Tax Rate×
UnemploymentTaxableEarnings
UNEMPLOYMENT TAXESpage 375
$6.32=0.8%×$790.00
$42.66=5.4%×$790.00
26 LESSON 13-2
JOURNALIZING EMPLOYER PAYROLL TAXES page 376
December 15. Recorded 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.
(continued on next slide)
27 LESSON 13-2
JOURNALIZING EMPLOYER PAYROLL TAXES
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page 376
4. Write the debit amount.1. Write the date.
5. Write the titles of the liability accounts credited.
2. Write the title of the expense account debited.
6. Write the credit amounts.3. Write the memorandum number.
(continued from previous slide)
28 LESSON 13-3
EMPLOYER ANNUAL REPORT TO EMPLOYEES OF TAXES WITHHELD
page 378
29 LESSON 13-3
EMPLOYER’S QUARTERLY FEDERAL TAX RETURN
page 379(continued on next slide)
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1. Heading 2. Number of employees
30 LESSON 13-3
EMPLOYER’S QUARTERLY FEDERAL TAX RETURN
page 379(continued on next slide)
3. Total quarterly earnings
4. Income tax withheld
5. Employee and employer social security and Medicare taxes 7. Total taxes
6. Social security plus Medicare taxes
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31 LESSON 13-3
EMPLOYER’S QUARTERLY FEDERAL TAX RETURN
page 379(continued from previous slide)
88 88 8899
8. Total taxes for each month 9. Total taxes
32 LESSON 13-3
EMPLOYER ANNUAL REPORTING OF PAYROLL TAXES
page 381
33 LESSON 13-4
PAYING THE LIABILITY FOR EMPLOYEE INCOME TAX, SOCIAL SECURITY TAX, AND MEDICARE TAX page 383
34 LESSON 13-4
FORM 8109, FEDERAL DEPOSIT COUPON page 384
35 LESSON 13-4
JOURNALIZING PAYMENT OF LIABILITY FOR EMPLOYEE INCOME TAX, SOCIAL SECURITY TAX, AND MEDICARE TAX
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4455
page 385
January 15. Paid cash for liability for employee income tax, $757.00; social security tax, $1,451.38; and Medicare tax, $339.42;
total, $2,547.80. Check No. 347.
1. Write the date.
2. Write the titles of the three accounts debited.
3. Write the check number.
4. Write the debit amounts.
5. Write the amount of the credit.
36 LESSON 13-4
PAYING THE LIABILITY FOR FEDERAL UNEMPLOYMENT TAX
page 386
37 LESSON 13-4
JOURNALIZING PAYMENT OF LIABILITY FOR FEDERAL UNEMPLOYMENT TAX
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page 387
January 31. Paid cash for federal unemployment tax liability for quarter ended December 31, $34.60. Check No. 367.
1. Write the date.
5. Write the amount of the credit to Cash.
4. Write the debit amount.
3. Write the check number.
2. Write the title of the account debited.
38 LESSON 13-4
JOURNALIZING PAYMENT OF LIABILITY FOR STATE UNEMPLOYMENT TAX page 387
January 31. Paid cash for state unemployment tax liability for quarter ended December 31, $233.55. Check No. 368.
1. Date
5. Credit amount
4. Debit amount
3. Check number
2. Account debited
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