Chapter 13: Chapter 13: PayrollPayroll

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13-2PayrollPayroll Employees and employers are required to pay local,

state, and federal payroll taxes. Employers must withhold taxes from each employee’s paycheck. The amount withheld for federal taxes is determined from tax tables published by the IRS.

The amount withheld depends on the employee’s earnings and the number of exemptions or withholding allowances claimed by the employee. FICA taxes and Medicare taxes are also deducted from employee’s paychecks.

It is the purpose of Chapter 13 to show you how to use Peachtree to enter payroll default information, add employees, make the correct journal entries for payroll, and to print the various payroll reports.

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Software Objectives, p. 491Software Objectives, p. 491

Explore the Payroll Setup Wizard. Enter initial payroll fields. Enter employee and employer default

information. Journalize and post payroll journal entries. Print paychecks. Make four backups: 2 for Joel's Sales &

Service; 2 for the end-of-chapter exercises.

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Web Objectives, p. 491Web Objectives, p. 491 Use your Internet browser to go to the book’s

website at www.mhhe.com/business/accounting/yacht2002

Go to the Internet Activity link on the book’s website. Then, select WEB EXERCISES PART 3. Complete the third web exercise in Part 3, “The Salary Calculator.”

Use a word processing program to write summaries of the websites that you visited

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Peachtree TipsPeachtree TipsThe exercises in Part 3 are cumulative. Chapters 11 and 12 must be completed before starting Chapter 13. The “Payroll Entry” window is the Payroll Journal.The educational version of the software packaged with the textbook includes generic tax tables. This means that payroll tax amounts will not be deducted automatically from paychecks. In Chapter 13, you will enter these deduction amounts manually on the “Payroll Entry” window (which is also the payroll journal).

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Peachtree Tips (continued)Peachtree Tips (continued)

Follow these steps to check the global tax table version.

1. Start Windows, then Peachtree. Open any company.

2. From the menu bar, click on Help, About Peachtree Accounting.

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Peachtree Tips (concluded)Peachtree Tips (concluded)

If your “Global Tax Table Version” is “19000101,” a generic tax table is installed on your computer. This tax table is supplied with all new installations of Peachtree. During payroll entry, payroll tax amounts will be calculated as zero. In this chapter, you will manually enter payroll tax amounts for each employee. In order for the software to calculate payroll tax amounts automatically, you need to subscribe to Peachtree’s tax service.

The first four digits of the “Global Tax Table Version” represent the current payroll tax year; for example, 20010101 would mean you have tax tables for 2001.

Visit Peachtree’s website at http://www.peachtree.com/html/tax_pca.cfm to display information about the payroll tax service.

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Backing Up Chapter 13Backing Up Chapter 13

Disk Backup Name

KB Page Nos.

17 of 18 A:\Chapter 13 Begin 132 KB 508

A:\Chapter 13 139 KB 517

A:\Exercise 13-1 140 KB 525

A:\Exercise 13-2 148 KB 527

TOTAL KB 559 KB.

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Chapter 13 TopicsChapter 13 Topics1. Software & web objectives, p. 4912. Getting started, pp. 494-495

a. Checking your global tax table version, pp. 495-496b. Establishing the payroll account, p. 496

3. Initial payroll fields, pp. 497-5024. Entering Employee and Employer Default Information, pp.

502-5065. Entering employee maintenance information,

pp. 507-5106. Backing up your data, p. 5107. Payroll entry, pp. 511-5168. Printing the payroll journal, p. 5179. Printing the general ledger trial balance, p. 518

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Chapter 13 Topics (concluded)Chapter 13 Topics (concluded)10. Backing up Chapter 13 data, p. 519

11. Internet activity, p. 519

12. Summary and review, p. 520

a. Going to the net, p. 520

b. Multiple-choice questions, pp. 521-523

c. Exercise 13-1, pp. 523-526

d. Exercise 13-2, p. 526-527

e. Chapter 13 index, p. 528

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Getting started, pp. 494-495Getting started, pp. 494-495

Complete steps 1 – 2i on pages 494-495. Remember, you must complete Chapters 11 and 12

before starting Chapter 13.

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Checking Your Global Tax Table Version, Checking Your Global Tax Table Version, p. 495p. 495

From the menu bar, click on Help, then About Peachtree Accounting. The “Peachtree Complete Accounting” screen appears.

Read the information on pages 495-496. Click on <OK> to close this window.

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Establishing the payroll account, p. 496Establishing the payroll account, p. 496 In order to establish the payroll checking account,

transfer funds from La Jolla Bank (Account No. 10200) to the Payroll Checking Account (Account No. 10300). Read the transaction information on p. 496.

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Payroll Setup Wizard, p. 497Payroll Setup Wizard, p. 497 Click on Maintain, Default Information, then Payroll Setup

Wizard.

Click on <Next>.

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Payroll Setup Wizard, continued, p. 498Payroll Setup Wizard, continued, p. 498 In the “State” box, select “CA.” Type 3.4 in the “Unemployment Percent” box.

Go to step 4 on page 499.

Click on the “Sales Defaults” folder tab.

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Payroll Setup Wizard, continued, p. 499Payroll Setup Wizard, continued, p. 499

Click on <Next>. The “Default Payroll G/L Accounts” screen appears.

You will make changes to these defaults on page 505 and 506. Click on <Next>.

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Payroll Setup Wizard, continued, p. 500Payroll Setup Wizard, continued, p. 500 Read the information on the “Payroll Tax Table

Information” screen.

Click on <Next>. Then, click on <Next> at the next three screens (see steps 7 - 9 on p. 500).

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Payroll Setup Wizard, continued, p. 501Payroll Setup Wizard, continued, p. 501 Read the information on the “Payroll Field Preview”

screen.

Click on the “EmployER Fields” folder tab.

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Payroll Setup Wizard, concluded, p. 501Payroll Setup Wizard, concluded, p. 501

Make sure you have selected the “EmployER Fields” folder tab.

Click on <Next>. Read the information on the “Payroll Setup Complete” screen, then click on <Finish>.

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13-20Entering employee and employer Entering employee and employer default information, pp. 502-503default information, pp. 502-503

Click on Maintain, Default Information, then Employees. Complete steps 1 and 2 on p. 502.

Click on <Ok>.

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Assign Payroll Fields for Assign Payroll Fields for EmployEE Paid Taxes, p. 503EmployEE Paid Taxes, p. 503

Click on the arrow next to “EmployEE Paid Taxes.”

Click on <Ok>.

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Assign Payroll Fields for Assign Payroll Fields for EmployER Paid Taxes, p. 503EmployER Paid Taxes, p. 503

Click on the arrow next to “EmployER Paid Taxes.”

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Assign Payroll Fields for EmployER Assign Payroll Fields for EmployER Paid Taxes, p. 504Paid Taxes, p. 504

Click on the arrow in the “State Disability (SDI)” field. Select “SDI.”

Click on <Ok> to return to the “Employee Defaults” window. Then, select the “Pay Levels” folder tab.

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Employee Defaults, p. 504Employee Defaults, p. 504 Make sure you have selected the “Pay Levels” folder

tab on the “Employee Defaults” window. Then for “Overtime,” select Account No. 77600, Overtime Expense.

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Employee Defaults, continued, p. 504-505Employee Defaults, continued, p. 504-505 Complete steps 11 – 18 on pp. 504-505.

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““Employer Fields” folder tab, p. 506Employer Fields” folder tab, p. 506 Complete step 19 on page 506.

Click on <Ok> to save your changes and return to the menu bar.

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Entering employee maintenance Entering employee maintenance information, pp. 507-508information, pp. 507-508

Click on Maintain, then Employees/Sales Reps.

Type in the employee information shown in step 2 on pp. 507-508.

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Maintain Employees/Sales Reps, Maintain Employees/Sales Reps, pp. 508-509pp. 508-509

Complete steps 3 – 6 on p. 508. This screen illustration is on p. 509.

Complete steps 7 – 13 on pp. 509-510.

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Backing up your data, p. 510Backing up your data, p. 510

Complete steps 1 – 9 on page 510 to back up your data.

Use “Chapter 13 Begin” as the back up name.

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13-30Payroll Entry, pp. 511-514Payroll Entry, pp. 511-514

Read the information on pages 511-513. Complete steps 1 – 11 on pages 512 - 514 to issue a payroll check.

Click on the “Print” icon.

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Print Forms: Payroll Checks, Print Forms: Payroll Checks, pp. 514 and 515pp. 514 and 515

Highlight “OCR - PR Preprint 1 Stub.” Read the “comment” on page 514.

Complete steps 14 – 16 on p. 515.

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About to Print Checks, p. 515About to Print Checks, p. 515 Type 101 as the “First check number.”

Click on <Ok>. Compare your check with the one shown on page 515. Complete steps 18 and 19 on p. 516. Compare your check with the one shown on p. 516.

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Printing the payroll journal, Printing the payroll journal, p. 517p. 517

Complete steps 1 and 2 on p. 517.Compare your printout of the payroll

journal to the one shown on p. 517.

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Printing the general ledger trial Printing the general ledger trial balance, p. 518balance, p. 518

Complete steps 1 and 2 on p. 518.Compare your printout of the general

ledger trial balance to the one shown on p. 518.

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Backing Up Chapter 13 Data, p. 519Backing Up Chapter 13 Data, p. 519

Complete steps 1 - 9 on page 519. The back up name is “Chapter 13.”

Click on <Ok>. Compare your check to the one shown on p. 381. Record the additional payments shown on p. 382.

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Glossary of TermsGlossary of TermsChapter 13Chapter 13

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Exemptions, p. 491Exemptions, p. 491

These are withholding allowances claimed by the employee. The number of exemptions or withholding allowances usually includes one for the employee, one for the employee’s spouse, and one for each dependent.

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Withholding allowances, p. 491Withholding allowances, p. 491

Exemptions claimed by the employee. The number of exemptions or withholding allowances usually includes one for the employee, one for the employee’s spouse, and one for each dependent.

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FICA taxes, p. 492FICA taxes, p. 492

This deduction from wages is also called the social security tax and provides qualified workers who retire at age 62 or older with monthly payments from the federal government. A portion of this tax is for Medicare.

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Medicare, p. 492Medicare, p. 492

A portion of FICA taxes (also called social security taxes) deducted from wages of qualified workers. Medical benefits called Medicare are received by retirees after reaching age 65.

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W-2 forms, p. 492W-2 forms, p. 492

An annual report of an employee’s wages subject to FICA and federal income tax that shows the amounts of these taxes that were withheld.

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Internet Activity, p. 519Internet Activity, p. 5191 Go to the book’s website at

www.mhhe.com/business/accounting/yacht2002

2 In the “Student Center” list, link to Internet Activities.

3 Link to WEB EXERCISES PART 3.

4 Complete the “SALARY CALCULATOR” exercise. Read steps 1-3.

5 Follow the steps shown on the book’s website to complete this Internet activity.

6 Using a word processing program, write a brief summary of what you find. Include all appropriate website addresses.

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Going to the Net, p. 520Going to the Net, p. 520 Access the National Payroll Week website at

www.ssa.gov/employer/ Link to General W-2 Filing Information, then answer these questions.”

1. What are dates that employers must send W-2 information to the Social Security Administration? (Include the dates for both electronic and paper filing.)

2. When must employers give employees their W-W?3. What two forms do employers send to the Social

Security Administration?