© 2014 Cengage Learning. All Rights Reserved. Test Review Strategy. Chapter 13 Vocab Test Review...

© 2014 Cengage Learning. All Rights Reserved.

Test

Rev

iew

Str

ateg

y

.

Chapter 13 Vocab Test ReviewUnderstanding how the brain processes, stores and retrieves information can also

improve your study habits. For some people, cramming for a test can work in the short term, but by studying only once in a concentrated fashion, the learner has not signaled to the brain that the information is important. So while the initial study session of French vocabulary words starts the process of learning, it’s the next review session a few days later that forces the brain to retrieve the information — essentially flagging it as important and something to be remembered.

“When you are cramming for a test, you are holding that information in your head for a limited amount of time,” Mr. Carey says. “But you haven’t signaled to the brain in a strong way that’s it’s really valuable.”

One way to signal to the brain that information is important is to talk about it. …or play “teacher” based on the information [you] have studied. Self-testing and writing down information on flashcards also reinforces learning.

Source: Better Ways to Learn, By Tara Parker-Pope


Different Forms of Payroll Information

● The total of gross earnings for all employees earning hourly wages, salaries, and commissions is called salary expense.

● The debit to Salary Expense will be equal to the Total Gross Pay of all employees for the pay period.

SLIDE 2

Lesson 13-1

LO1


Analyzing Payment of Payroll

SLIDE 3

Lesson 13-1

In each pay period, the payroll information for each employee is recorded on his or her employee earnings record.



SLIDE 4

Lesson 13-1

The payroll register and the employees earning record contain all the information needed to prepare a payroll as well as prepare the quarterly payroll tax reports.


Salary Expense

Dec. 15 8,076.75

Employee Income Tax Payable

Dec. 15 494.00

Social Security Tax Payable

Dec. 15 500.77

Medicare Tax Payable

Dec. 15 117.11

Health Insurance Premiums Payable

Dec. 15 230.00

Retirement Contributions Payable

Dec. 15 465.00

Dec. 15 6,269.87

Cash


SLIDE 5

LO1

Lesson 13-1

Dec. 15 6,269.87

=

Banking: An amount equal to net pay is deposited into a separate payroll checking account. The amount deposited covers everyone’s take home pay.

Salary Expense Debit is equal to total gross pay.


Journalizing Payment of a Payroll

SLIDE 6

December 15. Paid cash for semimonthly payroll, $6,269.87 (total payroll, $8,076.75, less deductions: employee income tax, $494.00; social security tax, $500.77; Medicare tax, $117.11; health insurance premiums, $230.00; retirement contributions, $465.00). Check No. 732.

LO2

Lesson 13-1

Total Earnings

AccountsCredited

PayrollDeductions

Amount Paidto Employees

Withheld taxes (deductions) are liabilities until paid to the government.


Employer Payroll Taxes are Business Expenses

● Employer Social Security and Medicare taxes: Employer matches what the employee pays (Same tax rate 6.2% and 1.45%)

● A federal tax paid by employers to administer the unemployment program is called federal unemployment tax. ● Commonly referred to as FUTA.

● A state tax paid by employers that is used to pay benefits to unemployed workers is called state unemployment tax. ● Commonly referred to as SUTA.

●Understand: Unemployment taxes are only paid by the employer

SLIDE 7

Lesson 13-2


Calculating Unemployment Taxes

SLIDE 8

Lesson 13-2

THREEΔGREEN PRODUCTS, INC.Calculation of FUTA Earnings

for December 15, 20-- Pay Period

1 2 3 4 5

EmployeePrior Accumulated

EarningsEarnings to Equal

FUTA Tax BaseEarnings for

Current Pay Period FUTA EarningsButler, John P. $27,195.00 $ 0.00 $1,466.25 $ 0.00

Feng, Anthony R. 5,260.00 1,740.00 1,494.00 1,494.00

Lendsey, Ann C. 1,648.00 5,352.00 240.00 240.00

Prisock, Mary G. 44,000.00 0.00 2,000.00 0.00

Swann, Justin A. 16,089.00 0.00 1,432.50 0.00

Wells, Cary B. 6,490.00 510.00 1,444.00 510.00

$2,244.00

Enter prior accumulatedearnings

1 Enter the difference between the FUTA tax base of 7,000 and prior accumulated earnings

2 Enter earnings for the current pay period

3

Enter the FUTA earnings

4

AKA: Unemployment taxable earnings

Note: Some workers already met the 7,000 tax base and are not included in the FUTA Earnings.


Journalizing Employer Payroll Taxes

SLIDE 9

December 15. Recorded employer payroll taxes expense, $757.01, for the semimonthly pay period ended December 15. Taxes owed are: social security tax, $500.77; Medicare tax, $117.11; federal unemployment tax, $17.95; state unemployment tax, $121.18. Memorandum No. 44.

LO3

Lesson 13-2

Payroll Taxes Expense

Dec. 15 757.01


Dec. 15 500.77 500.77


Dec. 15 117.11117.11

Unemployment Tax Payable—Federal

Dec. 15 17.95

Unemployment Tax Payable—State

Dec. 15 121.18

This is recorded in the general journal right after the employee’s payroll is recorded in the cash payments journal. It’s a new tax liability that must be recorded.


Journalizing Employer Payroll Taxes

SLIDE 10

LO3

Lesson 13-2

The employer payroll taxes become a new liability when the employees are paid. Therefore they are journalized at the end of the pay period in the general journal—even though they are actually paid to the government after the quarter ends.


Employer’s Quarterly Federal Tax Return

SLIDE 11

LO4

Lesson 13-3

Heading1

Number of Employees2

Total Quarterly Earnings3

Income Tax Withheld4

Employee and Employer Social Security and Medicare Taxes

5

Total Employee and Employer Social Security and Medicare Taxes

6

Total Taxes7


Employer’s Quarterly Federal Tax Return

SLIDE 12

LO4

Lesson 13-3

State Abbreviation 8

Monthly Schedule Depositor 9

Total Deposits 11

Monthly Deposits 10

Each employer is required by law to periodically report the payroll taxes withheld from employee salaries. Each employer must report this info quarterly.


Employer Annual Reporting of Payroll Taxes—in addition to the quarterly reports

SLIDE 13

LO4

Lesson 13-3


Employer Annual Report to Employees of Taxes Withheld -- W-2 Form

SLIDE 14

Lesson 13-3

The W-2 form reports an employee’s annual earnings and withholdings for federal income social security and Medicare taxes. Employer must mail it before January 31 of the following year. (0nly provided once a year.)

Remember, there is a tax base for Social Security—but not for Medicare. (In 2015, the SS tax base is $118,500. When I earn more than that, I don’t have to pay the 6.2% social security tax for the rest of the year. --Shock value is over—I do not earn that much money here at CHS. )


Paying the Liability for Employee Income Tax, Social Security Tax, and Medicare Tax

● Employers must pay to the federal, state, and local governments all payroll taxes withheld from employee earnings as well as the employer payroll taxes.

● Understand: The payment of payroll taxes to the government is referred to as a deposit.

● The 12-month period that ends on June 30 of the prior year that is used to determine how frequently a business must deposit payroll taxes is called the lookback period.

SLIDE 15

LO5

Lesson 13-4

Understand: The timing of the payroll tax payments to the government is based on the amount owed. The more they owe, the more frequently the government wants to be paid. Some (large) businesses must pay on the next banking day.


Making Federal Tax Deposits● New employers are monthly schedule depositors for the

first calendar year of business. ● After a lookback period is established, the business must

evaluate whether a change in its deposit period is required. (If the tax liability is not that large, the business can just deposit the payments quarterly.)

● Federal tax deposits must be paid using electronic fund transfers.

● Deposits can also be made using the Electronic Federal Tax Payment System (EFTPS).

● Tax rules change periodically.SLIDE 16

LO5

Lesson 13-4


Jan. 15 Bal998.00

Dec. 15494.00Dec. 31 504.00

Jan. 15 Bal998.00

Employee Income Tax Payable

Journalizing Payment of Liability for Employee Income Tax, Social Security Tax, and Medicare Tax

SLIDE 17

January 15. Paid cash for liability for employee income tax, $998.00; social security tax, $2,023.06; and Medicare tax, $473.14; total, $3,494.20. Check No. 748.

LO5

Lesson 13-4

CashJan. 15 3,494.20


Dec. 15500.76Dec. 15500.76Dec. 31 510.77Dec. 31 510.77

Jan. 15 Bal2,023.06

Jan. 15 Bal2,023.06

Jan. 15 Bal 473.14


Dec. 15 117.11Dec. 15 117.11Dec. 31 119.46Dec. 31 119.46

Jan. 15 Bal473.14

This is recorded in the cash payments journal.

It is considered a “deposit”.


Journalizing Payment of Liability for Employee Income Tax, Social Security Tax, and Medicare Tax

SLIDE 18

LO5

Lesson 13-4

Check Number

Check AmountSource document for paying off this tax liability to the government is a check.


Paying the Liability for Federal Unemployment Tax

● FUTA (Federal Unemployment) taxes are paid by the end of the month following each quarter if the liability amount is more than $500.00.

● FUTA tax is paid to the federal government using electronic funds transfer or the Electronic Federal Tax Payment System.

● The deposit for FUTA tax is similar to the deposit required for income tax, social security tax, and Medicare tax.

SLIDE 19

LO5

Lesson 13-4


Journalizing Payment of Liability for Federal Unemployment Tax

SLIDE 20

January 31. Paid cash for federal unemployment (FUTA) tax liability for quarter ended December 31, $297.02. Check No. 749.

LO5

Lesson 13-4

CashJan. 31 297.02

Unemployment Tax Payable—Federal

Nov. 30 Bal 290.84Dec. 15 3.89Dec. 31 2.29

Jan. 31 Bal297.02

Dec. 31 Bal 297.02

1 Date 3 Check NumberAccount Debited2

Debit Amount4 Check Amount5


Journalizing Payment of Liability for State Unemployment Tax

SLIDE 21

January 31. Paid cash for state unemployment (SUTA) tax liability for quarter ended December 31, $147.42. Check No. 750.

Lesson 13-4

CashJan. 31 147.42

Unemployment Tax Payable—State

Nov. 30 Bal 105.74Dec. 15 26.24Dec. 31 15.44

Jan. 31 Bal147.42

Dec. 31 Bal 147.42

Understand: In general, employers are required to pay state unemployment taxes during the month following each calendar quarter.

Source document is a check.

This state tax is used to pay benefits to the state’s unemployed workers


The End

© 2014 Cengage Learning. All Rights Reserved. Test Review Strategy. Chapter 13 Vocab Test Review...

Documents

Transcript of © 2014 Cengage Learning. All Rights Reserved. Test Review Strategy. Chapter 13 Vocab Test Review...