This document discusses payroll accounting. It provides instructions and examples for journalizing payroll transactions such as paying employees, recording payroll taxes, and paying payroll tax liabilities. Key steps include debiting salary expense and crediting various liability accounts for payroll, and then later debiting the liabilities and crediting cash when the tax payments are made.

1. Accounting IAccounting I
Chapter 14 – Payroll
Accounting, Taxes, &
Reports

2. PAYROLL REGISTERPAYROLL REGISTER
Lesson 14-1, page 332Lesson 14-1, page 332

3. ANALYZING PAYMENT OF PAYROLLANALYZING PAYMENT OF PAYROLL
Lesson 14-1, page 333Lesson 14-1, page 333

4. JOURNALIZING PAYMENT OF A PAYROLLJOURNALIZING PAYMENT OF A PAYROLL
December 15. Paid cash for semimonthly payroll, $2989.02 (total payroll,
$3,803.75, less deductions: employee income tax, $273.00; social security
tax, $247.26; Medicare tax, $57.07; health insurance premiums, $182.40;
U.S. Savings Bonds, $35.00; United Way donations, $20.00). Check No. 312.
Accounts Affected
Salary Expense
Employee Income Tax Payable
Social Security Tax Payable
Medicare Tax Payable
Health Insurance Premiums Payable
U.S. Savings Bond Payable
United Way Donations Payable
Cash
Entered
Debit side
Credit side
Credit side
Credit side
Credit side
Credit side
Credit side
Credit side
Change
Increased
Increased
Increased
Increased
Increased
Increased
Increased
Decreased
Lesson 14-1, page 334Lesson 14-1, page 334
Classification
Expense
Liability
Liability
Liability
Liability
Liability
Liability
Asset

5. JOURNALIZING PAYMENT OF A PAYROLLJOURNALIZING PAYMENT OF A PAYROLL
Lesson 14-1, page 334Lesson 14-1, page 334
5
1 3
2
3. Write the check number.
1. Write the date.
4. Write the amount debited to Salary Expense.
2. Write the title of the account debited.
5. Write the amount credited to Cash.
6. Write the titles of the accounts credited.
7. Write the credit amounts.
4
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6. Work Together &Work Together &
On Your Own –On Your Own –
Page 335Page 335

7. TTERMS REVIEWERMS REVIEW
federal unemployment tax
state unemployment tax
Lesson 14-2, page 340Lesson 14-2, page 340

8. TTERMS REVIEWERMS REVIEW
Federal Unemployment TaxFederal Unemployment Tax
A federal tax used for state &
federal administrative expenses of
the unemployment program.
Lesson 14-2, page 338Lesson 14-2, page 338

9. TTERMS REVIEWERMS REVIEW
State Unemployment TaxState Unemployment Tax
A state tax used to pay benefits to
unemployed workers.
Lesson 14-2, page 338Lesson 14-2, page 338

10. 1. Enter accumulated earnings and total earnings
for each employee.
UNEMPLOYMENT TAXABLE EARNINGSUNEMPLOYMENT TAXABLE EARNINGS
Lesson 14-2, page 337Lesson 14-2, page 337
1
3
1
2
3. Total the unemployment taxable earnings column.
2. Enter unemployment taxable earnings.

11. UNEMPLOYMENT TAXESUNEMPLOYMENT TAXES
Unemployment Federal Federal
Taxable Unemployment Unemployment
Earnings × Tax Rate = Tax
$183.75 × 0.8% = $1.47
Lesson 14-2, page 338Lesson 14-2, page 338
Unemployment State State
Taxable Unemployment Unemployment
Earnings × Tax Rate = Tax
$183.75 × 5.4% = $9.92
Calculate Unemployment Taxes—State
++++ −−−−
÷÷÷÷ ××××
Calculate Unemployment Taxes—Federal
++++ −−−−
÷÷÷÷ ××××

12. Unemployment Tax Payable—Federal
Medicare Tax Payable
Unemployment Tax Payable—State
Social Security Tax PayablePayroll Taxes Expense
JOURNALIZING EMPLOYER PAYROLL TAXESJOURNALIZING EMPLOYER PAYROLL TAXES
December 15. Recorded employer payroll taxes expense, $315.72, for the
semimonthly pay period ended Dec. 15. Taxes owed are: social security
tax, $247.26; Medicare tax, $57.07; federal unemployment tax, $1.47; state
unemployment tax, $9.92. Memorandum No. 63.
Accounts Affected
Payroll Taxes Expense
Soc. Security Tax Pay.
Medicare Tax Payable
Unemp. Tax Pay.—Fed.
Unemp. Tax Pay.—State
Entered
Debit side
Credit side
Credit side
Credit side
Credit side
Change
Increased
Increased
Increased
Increased
Increased
Lesson 14-2, page 339Lesson 14-2, page 339
Classification
Expense
Liability
Liability
Liability
Liability
normal balance
57.07
normal balance
247.26
normal balance
315.72
normal balance
9.92
normal balance
1.47
 
 


13. JOURNALIZING EMPLOYER PAYROLL TAXESJOURNALIZING EMPLOYER PAYROLL TAXES
Lesson 14-2, page 339Lesson 14-2, page 339
5
1
3 4
2
3. Write the memorandum number.
1. Write the date.
4. Write the debit amount.
2. Write the expense account debited.
5. Write the titles of the liability accounts credited.
6. Write the credit amounts.
6

14. Work Together &Work Together &
On Your Own –On Your Own –
Page 340Page 340

15. EMPLOYER ANNUAL REPORT TO EMPLOYEES OFEMPLOYER ANNUAL REPORT TO EMPLOYEES OF
TAXES WITHHELDTAXES WITHHELD
Lesson 14-3, page 341Lesson 14-3, page 341

16. EMPLOYER’S QUARTERLY FEDERAL TAX RETURNEMPLOYER’S QUARTERLY FEDERAL TAX RETURN
Lesson 14-3, page 342Lesson 14-3, page 342
5
1
4
2
3. Total Quarterly Earnings
1. Heading
4. Income Tax Withheld
2. Number of Employees
5. Employee and Employer
Social Security and
Medicare Taxes
6. Social Security plus
Medicare Taxes
7. Total Taxes
8. Total Taxes for Each
Month
9. Total Taxes
6
9
7
8
3
3

17. PREPARING EMPLOYER’S QUARTERLY FEDERALPREPARING EMPLOYER’S QUARTERLY FEDERAL
TAX RETURNTAX RETURN
Lesson 14-3, page 343Lesson 14-3, page 343
Total Earnings × Tax Rate = Tax
Social Security $22,575.00 × 13% = $2,934.75
Medicare $22,575.00 3% = $ 677.25
Employee Employer
Social Social
Federal Income Security and Security and Federal Tax
Tax Withheld + Medicare Tax + Medicare Tax = Liability
Calculate Social Security and Medicare Taxes
++++ −−−−
÷÷÷÷ ××××
Calculate Social Security and Medicare Taxes
++++ −−−−
÷÷÷÷ ××××
Dec. 1-15 $273.00 + $304.33 + $304.33 = 881.66
Dec. 16-31 $269.00 + 302.08 + $302.08 = $873.16
Totals $542.00 + 606.41 + 606.41 = $1,754.82

18. EMPLOYER ANNUAL REPORTING OF PAYROLLEMPLOYER ANNUAL REPORTING OF PAYROLL
TAXESTAXES
Lesson 14-3, page 344Lesson 14-3, page 344

19. Work Together &Work Together &
On Your Own –On Your Own –
Page 345Page 345

20. FORM 8109, FEDERAL DEPOSIT COUPONFORM 8109, FEDERAL DEPOSIT COUPON
Lesson 14-4, page 347Lesson 14-4, page 347

21. 1,754.82
Cash
Medicare Tax PayableSocial Security Tax PayableEmployee Inc. Tax Payable
JOURNALIZING PAYMENT OF LIABILITY FORJOURNALIZING PAYMENT OF LIABILITY FOR
EMPLOYEE INCOME TAX, SOCIAL SECURITY TAX,EMPLOYEE INCOME TAX, SOCIAL SECURITY TAX,
AND MEDICARE TAXAND MEDICARE TAX
January 15. Paid cash for liability for employee income tax,
$542.00; social security tax, $985.40; and Medicare tax, $227.42;
total, $1,754.82. Check No. 330.
Accounts Affected
Employee Inc. Tax Pay.
Social Security Tax Pay.
Medicare Tax Payable
Cash
Entered
Debit side
Debit side
Debit side
Credit side
Change
Decreased
Decreased
Decreased
Decreased
Lesson 14-4 page 348Lesson 14-4 page 348
Classification
Liability
Liability
Liability
Asset
normal balance
normal balance
985.40
normal balance
542.00
normal balance
227.42
 



22. JOURNALIZING PAYMENT OF LIABILITY FORJOURNALIZING PAYMENT OF LIABILITY FOR
EMPLOYEE INCOME TAX, SOCIAL SECURITY TAX,EMPLOYEE INCOME TAX, SOCIAL SECURITY TAX,
AND MEDICARE TAXAND MEDICARE TAX
Lesson 14-4, page 348Lesson 14-4, page 348
5
1 3
4
2
3. Write the check number.
1. Write the date.
4. Write the three debit amounts.
2. Write the title of the three accounts debited.
5. Write the amount of the credit to Cash.

23. PAYING THE LIABILITY FOR FEDERALPAYING THE LIABILITY FOR FEDERAL
UNEMPLOYMENT TAXUNEMPLOYMENT TAX
Lesson 14-4, page 349Lesson 14-4, page 349

24. CashUnemployment Tax Payable—Federal
JOURNALIZING PAYMENT OF LIABILITY FORJOURNALIZING PAYMENT OF LIABILITY FOR
FEDERAL UNEMPLOYMENT TAXFEDERAL UNEMPLOYMENT TAX
January 31. Paid cash for federal unemployment tax liability for
quarter ended December 31, $8.40. Check No. 343.
Accounts Affected
Unemployment Tax Payable—Federal
Cash
Entered
Debit side
Credit side
Change
Decreased
Decreased
Lesson 14-4, page 350Lesson 14-4, page 350
Classification
Liability
Asset
normal balance
8.40
normal balance
8.40
 

25. JOURNALIZING PAYMENT OF LIABILITY FORJOURNALIZING PAYMENT OF LIABILITY FOR
FEDERAL UNEMPLOYMENT TAXFEDERAL UNEMPLOYMENT TAX
Lesson 14-4, page 350Lesson 14-4, page 350
51 3 42
3. Write the check number.
1. Write the date.
4. Write the debit amount.
2. Write the title of the account debited.
5. Write the amount of the credit to Cash.

26. JOURNALIZING PAYMENT OF LIABILITY FOR STATEJOURNALIZING PAYMENT OF LIABILITY FOR STATE
UNEMPLOYMENT TAXUNEMPLOYMENT TAX
Lesson 14-4, page 350Lesson 14-4, page 350
3. Write the check number.
1. Write the date.
4. Write the debit amount.
2. Write the title of the account debited.
5. Write the amount of the credit to Cash.
51 3 42

27. Work Together &Work Together &
On Your Own –On Your Own –
Page 351Page 351