Identifying Entries for Payroll Liabilities The following list includes several

Determining Payroll Amounts SweepIt Cleaning Service reported the following amounts for the week ending November 4. The total amount earned by all employees is $2,193.40. The amount withheld for federal income tax is $263.00. Social security tax is $136.00, and Medicare tax is $31.80. Three of the employees each have $11.25 deducted for hospital insurance. The amount withheld for state income tax is $38.70. Instructions Answer the following questions concerning the November 4 payroll for SweepIt Cleaning Service. 1. What amount is recorded in the Salaries Expense account? 2. What amount is recorded in the Medicare Tax Payable account? 3. What is the total amount of liabilities for the weekly payroll? 4. What amount is entered in the Hospital Insurance Premiums Payable account? 5. What amount is recorded as a credit for the Cash in Bank account?

Calculating Employer’s Payroll Taxes For the week ending June 30, EZ Copy Center’s payroll has total gross earnings of $4,836.60. Calculate the employer’s payroll taxes. Use the following percentages: Social security tax 6.2% Federal unemployment tax 0.8% Medicare tax 1.45% State unemployment tax 5.4%

Identifying Entries for Payroll Liabilities The following list includes several payroll-related items used in preparing the weekly payroll for Outdoor Adventures. These items are included in either the entry to record the payroll or the entry to record the employer’s payroll taxes. Employees’ federal income tax Employees’ state income tax Employer’s social security tax Union dues U.S. savings bonds Employees’ social security tax Employer’s Medicare tax State unemployment tax Federal unemployment tax Employees’ Medicare tax Instructions Use the form provided in your working papers. Place a check mark in the column that describes the entry in which the item is recorded: • entry to record the payroll • entry to record the employer’s payroll taxes.

Payment of Payroll Liabilities The following account balances appear in the general ledger for Soap Box Laundry on April 30. Instructions Record the payment of the four liability accounts on page 34 of the general journal. (Hint: Two checks are written.)

Analyzing a Source Document Instructions Based on this payroll register, record the appropriate journal entry in your working papers. Use page 14 in the general journal.

Journalizing Payroll Transactions a. In what expense account are employees’ earnings often recorded? b. List the accounts in which the payroll liabilities for federal income tax and Medicare tax are recorded.

Employer’s Payroll Taxes a. Which payroll taxes are expenses to the business? b. On what amount are the employer’s FICA taxes computed?

Computing Payroll Tax Expense a. How is the employer’s share of FICA tax calculated? b. The share of both the employer’s and employee’s FICA tax is calculated using the same percentages, but the amount for each can differ slightly. What causes this?

Journalizing Tax Liabilities a. What is the journal entry to record the FUTA tax expense? b. The amount of the FICA tax deposit is twice as much as the employer’s FICA tax expense. Why?

Payroll Tax Reports and Forms a. What is the difference between Form 940 and Form 941? b. What information does Form W-3 contain?

Calculating Employer’sPayroll Taxes Instructions For each of the total gross earnings amounts recorded in the past five pay weeks for Hot Suds Car Wash, determine these taxes: • employer’s FICA taxes (social security 6.2%, Medicare 1.45%) • federal unemployment tax (.8%) • state unemployment tax (5.4%) Use the form provided in the working papers. None of the employees has reached the taxable earnings limit. Total gross earnings: 1. $914.80 4. $791.02 2. $1,113.73 5. $1,245.75 3. $2,201.38 Explain the relationship between federal and state unemployment tax rates.

Recording the Payment of the Payroll The totals of the payroll register for Kits & Pups Grooming are shown in your working papers. On December 31 the owner, Abe Shultz, wrote Check 1400 to pay the payroll. Instructions In your working papers: 1. Record the payroll entry in the general journal. 2. Post the entry to the general ledger accounts. Identify the payroll liability account that has the largest credit entry.

Journalizing Payroll Transactions The Outback Guide Service payroll register for the week ending Dec. 31 follows: Instructions In your working papers: 1. Record the entry for the payment of the payroll on page 15 of the general journal. (Check 1201, dated Dec. 31). 2. Use the information in the payroll register to compute the employer’s payroll taxes: • FICA taxes (6.2% for social security, 1.45% for Medicare) • federal unemployment tax (0.8%) • state unemployment tax (5.4%) None of the employees has reached the taxable earnings limit. 3. Record the entry for the employer’s payroll taxes on page 15 of the general journal. Examine the entry recording the payment of payroll. Which account, Social Security Tax Payable or Employees’ Federal Income Tax Payable, had the larger credit?

Recording and Posting Payroll Transactions Showbiz Video completed the following payroll transactions during the first two weeks of December. Showbiz Video pays its employees on a biweekly basis (every two weeks). Instructions In your working papers: 1. Record the December 13 transactions on page 38 in the general journal. 2. Post both payroll entries to the appropriate general ledger accounts. 3. Journalize and post the December 16 transactions. Identify the payroll accounts that have a balance after entries have been posted.

Recording and Posting Payroll Transactions Job Connect pays its employees twice a month. Employee earnings and tax amounts for the pay period ending December 31 are: Gross earnings $12,543.40 Social security tax 777.69 Medicare tax 181.88 Employees’ federal income tax 662.00 Employees’ state income tax 250.87 Instructions In your working papers 1. Prepare Check 1602 (payable to “Job Connect Payroll Account”) to transfer the net pay amount to the payroll checking account. 2. On page 19 of the general journal, record the payment of the payroll. 3. Post the payroll transaction to the general ledger. 4. Compute payroll tax expense forms and journalize the entry to record employer’s payroll taxes using these rates: • social security, 6.2% • state unemployment, 5.4% • Medicare, 1.45% • federal unemployment, 0.8% No employee has reached the taxable earnings limit. 5. Post the entry to the general journal. 6. Prepare checks dated December 31 to pay the following payroll liabilities: (a) Federal unemployment taxes, payable to First City Bank (Check 1603). (b) State unemployment taxes, payable to the State of North Carolina (Check 1604). (c) Employees’ federal income taxes and FICA taxes, payable to First City Bank (Check 1605). 7. Journalize and post the entries for the payment of the payroll liabilities. 8. Complete payroll tax expense forms. Prepare a Form 8109 for each of the two federal tax deposits paid in Instruction 6, parts (a) and (c). The oval for FICA and federal income tax is 941. The oval for the federal unemployment tax is 940. Calculate the employer’s total payroll-related expense for the pay period.