chapter eight employee earnings and deductions. copyright © houghton mifflin company. all rights...

Chapter Eight

Employee Earnings and Deductions

Copyright © Houghton Mifflin Company. All rights reserved. 8 - 2

Performance Objectives

1. Understand the role of laws that affect payroll deductions and contributions

2. Calculate total earnings based on an hourly, piece-rate, or commission basis

3. Determine deductions using tables of employees’ income tax withholding


Performance Objectives

4. Complete a payroll register

5. Journalize the payroll entry from a payroll register

6. Maintain employees’ individual earnings records


Employer Requirements

• To withhold federal and state taxes from employees’ paychecks

• To pay the withholdings (as well as other payments) to government agencies before specific deadlines

• To submit federal and state reports on official forms

• This makes payroll accounting very important!


Required Payroll Records

1. Employee personal information– Name– Address– Social Security number– Date of birth

2. Data on wage payments– Dates and amounts of payments – Payroll periods

3. Amount of taxable wages paid– Dates and amounts earned year to date for the calendar

year involved

4. Amount of taxes withheld for each employee by pay period


Calendar Year

• A twelve-month period beginning on January 1 and ending on December 31 of the same year


Employees and Independent Contractors

• Employee– Under “direction and control” of employer

• Independent contractor– Someone who is engaged for a definite job or

service– Not under “direction and control” of employer– Decides how to do his or her own work

• Payments to independent contractors not subject to withholding or payroll taxes


Objective 1

Understand the role of laws that affect payroll deductions and contributions


Laws Affecting Employees’ Pay Deductions

• Fair Labor Standards Act– The act of 1938 that provides for minimum

standards for wages and overtime, including provisions related to child labor and equal pay for equal work

• Current Tax Payment Act– An act to require employers to withhold

and pay to the Internal Revenue Service employee funds


Laws Affecting Employees’ Pay Deductions

• FICA Tax (employees’ share)– Social Security Act of 1935 and its

amendments provide benefits for retired workers, their spouses and minor children, disability insurance, Medicare, and supplemental security income

– Employees contribute 6.2 percent on first $84,900 earned in a calendar year for Social Security

– Employees contribute 1.45 percent on all earnings in calendar year for Medicare


Laws Affecting Employer’s Payroll Tax Contributions

• Federal Insurance Contribution Act (FICA)

• State Unemployment Tax Act (SUTA)

• Federal Unemployment Tax Act (FUTA)

• Workers’ compensation laws


FICA Taxes

• Social Security taxes plus Medicare taxes, paid by both employee and employer under the provisions of the Federal Insurance Contributions Act

• Employer matches employee contribution


State Unemployment Tax Act (SUTA)

• A tax levied only on the employer in most states

• Rates differ among the various states; however, they are generally 5.4 percent or higher on the first $7,000 of total earnings paid to each employee during the calendar year

• Proceeds used to pay subsistence benefits to unemployed workers


Federal Unemployment Tax Act (FUTA)

• A tax levied only on the employer, equal to 0.8 percent of the first $7,000 of total earnings paid to each employee during the calendar year

• This tax is used to support government-run employment offices throughout the country


Workers’ Compensation Laws

• Laws that protect employees and dependents against losses due to death or injury incurred on the job


Payment Periods

• Weekly

• Bi-weekly– 26 times a year

• Semimonthly– 24 times a year

• Monthly


Earnings

• Wages– Contract states hourly, weekly, or piecework rate of pay

• Salary– Contract states monthly or yearly earnings

• Overtime—generally 1 ½ pay, minimums per FLSA• Supplemental pay

– Commissions– Bonuses– Cost-of-living adjustments– Profit sharing

• Paid by– Check or cash– Other assets (recorded at market value, or fair value)


Performance Objective 2

Calculate total earnings based on an hourly, piece-rate, or commission basis


Payroll• In earlier chapters we have seen:

• The $1,400.00 is really gross pay before deductions• Gross pay (or earnings)

– Total amount before deductions

• Deductions– Amounts taken out of an employee’s paycheck each pay period

• “Take home pay” or net pay– Gross pay minus deductions

DescriptionPost.Ref. Debit Credit

1 20052 June 24 Wages Expense 511 1,400.00 3 Cash 111 1,400.00 4 Paid wages of part-time employees (Ck. No. 3496)

General Journal

Date

Page 4Line #


Time Card


Calculate Hourly Wages and Overtime

Hourly Rate $22.84Overtime Multiple 150%

Assumptions

Regular Hour Worked 40 Hours x Hourly Rate $913.60

Overtime Hours WorkedMonday - Wednesday 0 Hours x Hourly Rate x Multiple =Thursday 2 Hours x Hourly Rate x Multiple = $

68.52Friday 1 Hours x Hourly Rate x Multiple = 34.26Saturday 3 Hours x Hourly Rate x Multiple = 102.78

Total Gross Earnings $1,119.16

Overtime by Day Method

Regular Pay 46 Total Hours x Hourly Rate $1,050.64Overtime Premium 6 Overtime Hours x (Multiple - 100%) x Hourly Rate 68.52

Total Gross Earnings $1,119.16

Overtime Premium Method

0


Calculate Hourly Overtime for Salary

Monthly Salary $2,250.00Overtime Multiple 1.5Hours Worked in One Week 40Overtime Hours 4

Assumptions

Calculate Yearly Pay Monthly Salary x 12 $27,000.00Calculate Weekly Pay Yearly Salary / 52 $519.23Calculate Hourly Pay Weekly Salary / 40 $12.98

(1) Calculate Hourly Rate First

Regular Pay Hours x Hourly Rate 519.20$ Overtime Pay Hours x Hourly Rate x Multiple 77.88$

Total Gross earnings 597.08$

(2) Then Calculate Overtime


Piece Rate

Piece rate per boomerang finished $2.12Number of boomerangs per week 500Total gross pay for the week(Piece rate x number of boomerangs) $1,060.00


Commission

JanuarySales

Commission on Sales(Jan. Sales x Commission

Rate)

Base Salary(from Contract)

Gross Pay(Comm. + Base)

Vicky Chan $125,000 $4,063 $1,725 $5,788Jamal Robertson $97,855 $3,180 $1,725 $4,905Walt Dickenson $81,250 $2,641 $1,725 $4,366Sue Wong $95,500 $3,104 $1,725 $4,829Tom Carolyn $78,550 $2,553 $1,725 $4,278Totals

CommissionRate

3.25%


Deductions from Total Earnings1. Federal income tax withholding2. State income tax withholding3. FICA tax (Social Security and Medicare), employee’s

share4. Purchase of U.S. savings bonds5. Union dues6. Insurance deductions (medical or life)7. Charitable contributions8. Pension contributions9. Credit union

– Automatic savings– Automatic loan repayment

10. Other deductions possible


Employees’ Federal Income Tax Withholding: Employer Requirements

• Withhold federal income taxes from employees’ paychecks

• Pay the withheld federal income taxes to the IRS

• Keep required records


Basis of Federal Income Tax Withholding

• Taxable earnings– The amount of an

employee’s earnings subject to a tax

• Marital status

• Number of withholding allowances claimed

• Withholding allowance– Amount of earnings that

are exempt from federal income tax

– How many?• One for personal

• One for spouse

• One for each dependent

• Exemption– Amount of yearly

earnings that are not taxed


Employee’s Withholding Allowance Certificate (Form W-4)

• A form that specifies the number of allowances claimed by each employee

• Gives the employer the authority to withhold money for an employee’s federal income taxes and FICA taxes

• Must be filled out by every employee


Circular E

• Actual book or downloadable files to use in spreadsheet or accounting program provided free of charge by IRS to employers

• Contains withholding tables– Federal income tax– FICA

• Social Security• Medicare

• Lists rules for employer’s deposits• Lists requirements for submitting reports


Wage-Bracket Tax Tables

• Tables providing the amounts to be deducted for income taxes based on earnings, marital status, and number of allowances claimed

• Payment periods covered– Monthly– Semimonthly– Biweekly– Weekly– Daily


Using the Tables to Determine Deductions

• Step 1: Select correct table for payment period and marital status

• Step 2: Locate gross pay in first two columns• Step 3: Find column for number of

withholding allowances• Intersection shows amount of federal income

tax to withhold from paycheck• Be careful of:

– “At least”– “But less than”


State Income Tax Withholding

• State tablesor

• Percentage of federal income tax deduction– Textbook assumes that employee’s state

income tax deduction is 20% of the federal income tax deduction


FICA Taxes

• Social Security Taxes

• Federal taxes levied on employees and employers

• Proceeds used for– Pension payments

after a worker has reached 62 years

– Disability benefits for disabled worker and dependents

• Medicare Taxes• Federal taxes levied

on employees and employers

• Proceeds used for medical insurance for eligible people age 65 or over


FICA Taxes

• Social Security rate = 6.2%(number equivalent = .062)– Only the first $84,900 of earnings are taxed

• Medicare rate = 1.45%(number equivalent = .0145)– All earnings are taxed

• Applied to gross earnings during a calendar year

• Calculated separately because of the different upper limits for two types of taxes


Calculating FICA Taxes

Week Earnings = $1,119.16Cumulative Earnings to Date = $32,890.00FICA

Social Security Maximum $84,900.00Social Security Rate 6.20%Medicare Rate 1.45%

FICA Social Security Deduction

FICA Medicare Deduction

Vicky Wise





FICA Social Security Deduction($1,119.16*0.062) = $69.39FICA Medicare Deduction(Earnings*Rate) $16.23

Vicky Wise







Tommy Webster





FICA Social Security Deduction($84,900 - $81,233)*0.062 = $227.35FICA Medicare Deduction(Earnings*Rate) $58.00

Tommy Webster







Arwin King





FICA Social Security Deduction($85,525 > $84,900, thus: no tax) $0.00FICA Medicare Deduction(Earnings*Rate) $15.23

Arwin King


Unemployment Taxes

• Unemployment taxable earnings represent remaining untaxed earnings up to state and federal maximum

• Not paid by employee in most states

• Paid by employer on the employee’s behalf



Complete a payroll register


Payroll Register

• A multicolumn form prepared for each payroll period listing the earnings, deductions, and net pay for each employee


Payroll Register for Week Ended: October 7, 2005

Let’s look at the different sections of the payroll register

FederalIncome Tax

StateIncome Tax

SocialSecurity Tax Medicare Tax

MedicalInsurance

TotalDeductions

NetAmount

Check#

150.00 30.00 69.39 16.23 11.19 276.81 842.35 93180.00 16.00 45.59 10.66 11.03 UW 12.00 175.28 560.02 932

107.00 21.40 56.77 13.28 13.73 UW 15.00 227.18 688.47 933123.00 24.60 66.54 15.56 16.10 245.80 827.45 934394.00 78.80 117.11 27.39 28.33 UW 645.63 1,243.26 935395.00 79.00 117.28 27.43 28.38 UW 10.00 657.09 1,234.58 936312.00 62.40 99.14 23.18 23.98 UW 12.00 532.70 1,066.26 937193.00 38.60 78.85 18.44 19.08 UW 20.00 367.97 903.78 938284.00 56.80 93.03 21.76 22.51 478.10 1,022.33 939372.00 74.40 112.44 26.30 27.20 AR 50.00 662.34 1,151.17 940164.00 32.80 72.47 16.95 17.53 UW 25.00 328.75 840.08 941665.00 133.00 18.60 41.85 41.44 UW 30.00 929.89 1,956.35 942

3,239.00 647.80 947.21 259.03 260.50 174.00 5,527.54 12,336.10

Other

Deductions Payments

Regular Overtime Total UnemploymentSocial

Security MedicareAsino, Matte E. 46 32,890.00 913.60 205.56 1,119.16 34,009.16 0.00 1,119.16 1,119.16Boritsky, Olga 45 6,192.00 619.20 116.10 735.30 6,927.30 735.30 735.30 735.30Dray, Greg G. 49 6,846.00 684.60 231.05 915.65 7,761.65 154.00 915.65 915.65Foulkes, Bob L. 40 38,637.00 1,073.25 0.00 1,073.25 39,710.25 0.00 1,073.25 1,073.25Groyer, Milli K. 40 68,000.00 1,888.89 0.00 1,888.89 69,888.89 0.00 1,888.89 1,888.89Kramer, Ada A. 40 68,100.00 1,891.67 0.00 1,891.67 69,991.67 0.00 1,891.67 1,891.67Minkowitz, John L. 55 36,840.00 1,023.33 575.63 1,598.96 38,438.96 0.00 1,598.96 1,598.96Orleons, Janet C. 40 45,783.00 1,271.75 0.00 1,271.75 47,054.75 0.00 1,271.75 1,271.75Pinkovich, Mark S. 44 46,970.00 1,304.72 195.71 1,500.43 48,470.43 0.00 1,500.43 1,500.43Romero, Sheila J. 45 54,978.00 1,527.17 286.34 1,813.51 56,791.51 0.00 1,813.51 1,813.51Tivoli, Jake T. 40 42,078.00 1,168.83 0.00 1,168.83 43,246.83 0.00 1,168.83 1,168.83Wilson, Sharlet D. 52 84,600.00 1,990.56 895.68 2,886.24 87,486.24 0.00 300.00 2,886.24Totals 531,914.00 15,357.57 2,506.07 17,863.64 549,777.64 889.30 15,277.40 17,863.64

EndingCumulative

EarningsNameTotalHours

BeginningCumulative

Earnings

Earnings Taxable Earnings


Compare Beginning Cumulative Earnings with Maximums for Social Security and Unemployment

Asino, Matte E. 46 32,890.00Boritsky, Olga 45 6,192.00Dray, Greg G. 49 6,846.00Foulkes, Bob L. 40 38,637.00Groyer, Milli K. 40 68,000.00Kramer, Ada A. 40 68,100.00Minkowitz, John L. 55 36,840.00Orleons, Janet C. 40 45,783.00Pinkovich, Mark S. 44 46,970.00Romero, Sheila J. 45 54,978.00Tivoli, Jake T. 40 42,078.00Wilson, Sharlet D. 52 84,600.00Totals 531,914.00

NameTotalHours

BeginningCumulative


Calculate Regular and Overtime Earnings

Regular Overtime TotalAsino, Matte E. 46 32,890.00 913.60 205.56 1,119.16Boritsky, Olga 45 6,192.00 619.20 116.10 735.30Dray, Greg G. 49 6,846.00 684.60 231.05 915.65Foulkes, Bob L. 40 38,637.00 1,073.25 0.00 1,073.25Groyer, Milli K. 40 68,000.00 1,888.89 0.00 1,888.89Kramer, Ada A. 40 68,100.00 1,891.67 0.00 1,891.67Minkowitz, John L. 55 36,840.00 1,023.33 575.63 1,598.96Orleons, Janet C. 40 45,783.00 1,271.75 0.00 1,271.75Pinkovich, Mark S. 44 46,970.00 1,304.72 195.71 1,500.43Romero, Sheila J. 45 54,978.00 1,527.17 286.34 1,813.51Tivoli, Jake T. 40 42,078.00 1,168.83 0.00 1,168.83Wilson, Sharlet D. 52 84,600.00 1,990.56 895.68 2,886.24Totals 531,914.00 15,357.57 2,506.07 17,863.64

NameTotalHours

BeginningCumulative

Earnings


Calculate Ending Cumulative Earnings

Regular Overtime TotalAsino, Matte E. 46 32,890.00 913.60 205.56 1,119.16 34,009.16Boritsky, Olga 45 6,192.00 619.20 116.10 735.30 6,927.30Dray, Greg G. 49 6,846.00 684.60 231.05 915.65 7,761.65Foulkes, Bob L. 40 38,637.00 1,073.25 0.00 1,073.25 39,710.25Groyer, Milli K. 40 68,000.00 1,888.89 0.00 1,888.89 69,888.89Kramer, Ada A. 40 68,100.00 1,891.67 0.00 1,891.67 69,991.67Minkowitz, John L. 55 36,840.00 1,023.33 575.63 1,598.96 38,438.96Orleons, Janet C. 40 45,783.00 1,271.75 0.00 1,271.75 47,054.75Pinkovich, Mark S. 44 46,970.00 1,304.72 195.71 1,500.43 48,470.43Romero, Sheila J. 45 54,978.00 1,527.17 286.34 1,813.51 56,791.51Tivoli, Jake T. 40 42,078.00 1,168.83 0.00 1,168.83 43,246.83Wilson, Sharlet D. 52 84,600.00 1,990.56 895.68 2,886.24 87,486.24Totals 531,914.00 15,357.57 2,506.07 17,863.64 549,777.64

EndingCumulative Name

TotalHours

BeginningCumulative

Earnings


Calculate Taxable Earnings

UnemploymentSocial

Security Medicare0.00 1,119.16 1,119.16

735.30 735.30 735.30154.00 915.65 915.65

0.00 1,073.25 1,073.250.00 1,888.89 1,888.890.00 1,891.67 1,891.670.00 1,598.96 1,598.960.00 1,271.75 1,271.750.00 1,500.43 1,500.430.00 1,813.51 1,813.510.00 1,168.83 1,168.830.00 300.00 2,886.24

889.30 15,277.40 17,863.64

Taxable Earnings

We calculate the amount of earnings that are taxable for the unemployment taxes. We will use this amount in Chapter 9 to calculate the tax.


Calculate Deductions

FederalIncome Tax

StateIncome Tax

SocialSecurity Tax Medicare Tax

MedicalInsurance

TotalDeductions

150.00 30.00 69.39 16.23 11.19 276.8180.00 16.00 45.59 10.66 11.03 UW 12.00 175.28

107.00 21.40 56.77 13.28 13.73 UW 15.00 227.18123.00 24.60 66.54 15.56 16.10 245.80394.00 78.80 117.11 27.39 28.33 645.63395.00 79.00 117.28 27.43 28.38 UW 10.00 657.09312.00 62.40 99.14 23.18 23.98 UW 12.00 532.70193.00 38.60 78.85 18.44 19.08 UW 20.00 367.97284.00 56.80 93.03 21.76 22.51 478.10372.00 74.40 112.44 26.30 27.20 AR 50.00 662.34164.00 32.80 72.47 16.95 17.53 UW 25.00 328.75665.00 133.00 18.60 41.85 41.44 UW 30.00 929.89

3,239.00 647.80 947.21 259.03 260.50 174.00 5,527.54

Other

Deductions

FromTables

20% ofFed. Tax

Calculate,6.2%

84,900

Calculate,1.45%

GivenGiven

UW = United WayAR = A/R


Total Earnings – Total Deductions = Net Pay&

Two Different Wages Expenses

…Earnings

Total1,119.16

735.30915.65

1,073.251,888.891,891.671,598.961,271.751,500.431,813.511,168.832,886.24

17,863.64

TotalDeductions

NetAmount

Ck. No.

SalesWages Expense

OfficeWages Expense

276.81 842.35 931 1,119.16175.28 560.02 932 735.30227.18 688.47 933 915.65245.80 827.45 934 1,073.25645.63 1,243.26 935 1,888.89657.09 1,234.58 936 1,891.67532.70 1,066.26 937 1,598.96367.97 903.78 938 1,271.75478.10 1,022.33 939 1,500.43662.34 1,151.17 940 1,813.51328.75 840.08 941 1,168.83929.89 1,956.35 942 2,886.24

5,527.54 12,336.10 13,626.97 4,236.67

Expense Account DebitedPayments



Journalize the payroll entry from a payroll register


Journalize the Payroll Entry from a Payroll Register

ExpenseFederal

Income TaxState

Income TaxSocial

Security Tax Medicare TaxMedical

InsuranceTotal

DeductionsNet

AmountCheck

#150.00 30.00 69.39 16.23 11.19 276.81 842.35 93180.00 16.00 45.59 10.66 11.03 UW 12.00 175.28 560.02 932


3,239.00 647.80 947.21 259.03 260.50 174.00 5,527.54 12,336.10

Other

Deductions Payments



EndingCumulative


BeginningCumulative

Earnings



Payroll Journal Entry:Expenses


2005October 7 Sales Wages Expense 13,626.97

Office Wages Expense 4,236.67

General Journal page 5

Date


Journalize the Payroll Entry from a Payroll Register

ExpenseFederal

Income TaxState

Income TaxSocial

Security Tax Medicare TaxMedical

InsuranceTotal

DeductionsNet

AmountCheck

#150.00 30.00 69.39 16.23 11.19 276.81 842.35 93180.00 16.00 45.59 10.66 11.03 UW 12.00 175.28 560.02 932


3,239.00 647.80 947.21 259.03 260.50 174.00 5,527.54 12,336.10

Other

Deductions Payments

Payables



EndingCumulative


BeginningCumulative

Earnings



Payroll Journal Entry:Expenses and Payables


2005October 7Sales Wages Expense 13,626.97

Office Wages Expense 4,236.67Employees’ Federal Income Tax Payable 3,239.00FICA Tax Payable 1,206.24Employees' State Income Tax Payable 647.80Employees' Medical Insurance Payable 260.50Employees' United Way Payable 124.00Accounts Receivable 50.00Wages Payable 12,336.10

Payroll Register, for week ended Oct. 7


Date


Payroll Journal Entry

Although Social Security & Medicare taxes are calculated separately, they are treated as a single payable because they will be paid at the same time

Equivalent to sum of take home pay for all employees


2005October 7 Sales Wages Expense 13,626.97

Office Wages Expense 4,236.67Employees Federal Income Tax Payable 3,239.00FICA Tax Payable 1,206.24Employees' State Income Tax Payable 647.80Employees' Medical Insurance Payable 260.50Employees' United Way Payable 124.00Accounts Receivable 50.00Wages Payable 12,336.10

Payroll Register, for week ended Oct. 7


Date


Paying Employees from Regular Checking Account


Paycheck


Payroll Bank Account

• A special checking account used to pay a company’s employees

• Money transferred from the regular checking account to the payroll account


Journal Entry for Paying Employees from Payroll Bank Account


2005October 8 Wages Payable 12,336.10

Cash—Payroll Bank Account 12,336.10Paid wages for week ended October 7

Date

General Journal Page 11

Clear payable with a debit

Credit Cash— Payroll Bank

Account



Maintain employees’ individual earnings records


Employee’s Individual Earnings Record

• A supplementary record for each employee showing personal payroll data and yearly cumulative earnings, deductions, and net pay

• Contains source data for the required payroll tax reports


Employee’s Individual Earnings Record


Demonstration Problem

Payroll Register for Week Ended October 14, 2005—page 72

Payroll Problem

Names Beg. Cum. Earn. Week's Earnings Unemployment FICA FICABarker, T. C. 6,820.00 480.00 UE Max SS Max Medicare MaxEllis, M. R. 6,840.00 470.00 $7,000.00 $84,900.00Fisk, C. P. 36,320.00 740.00 Fed Rate SS Rate M RateJanus, V. O. 69,043.00 540.00 0.008 6.20% 1.45%Pham, H. L. 84,857.00 1,389.00 State RateGell, M. A. 85,430.00 1,690.00 0.054


Look to Beginning Earnings to Determine If There Are Taxable Earnings

Total UnemploymentSocial

Security MedicareBarker, T. C. 6,820.00 480.00Ellis, M. R. 6,840.00 470.00Fisk, C. P. 36,320.00 740.00Janus, V. O. 69,043.00 540.00Pham, H. L. 84,857.00 1,389.00Gell, M. A. 85,430.00 1,690.00Totals 289,310.00 5,309.00 0.00 0.00 0.00 0.00

Payroll Register for Week Ended October 14, 2005—page 72Ending

Cumulative EarningsName

BeginningCumulative

Earnings

Taxable Earnings


Calculate Ending Cumulative Earnings


Security MedicareBarker, T. C. 6,820.00 480.00 7,300.00Ellis, M. R. 6,840.00 470.00 7,310.00Fisk, C. P. 36,320.00 740.00 37,060.00Janus, V. O. 69,043.00 540.00 69,583.00Pham, H. L. 84,857.00 1,389.00 86,246.00Gell, M. A. 85,430.00 1,690.00 87,120.00Totals 289,310.00 5,309.00 294,619.00 0.00 0.00 0.00

EndingCumulative

EarningsName

BeginningCumulative

Earnings

Taxable EarningsPayroll Register for Week Ended October 14, 2005—page 72


Calculate Taxable Earnings


Security MedicareBarker, T. C. 6,820.00 480.00 7,300.00 180.00 480.00 480.00Ellis, M. R. 6,840.00 470.00 7,310.00 160.00 470.00 470.00Fisk, C. P. 36,320.00 740.00 37,060.00 0.00 740.00 740.00Janus, V. O. 69,043.00 540.00 69,583.00 0.00 540.00 540.00Pham, H. . 84,857.00 1,389.00 86,246.00 0.00 43.00 1,389.00Gell, M. A. 85,430.00 1,690.00 87,120.00 0.00 0.00 1,690.00Totals 289,310.00 5,309.00 294,619.00 340.00 2,273.00 5,309.00



BeginningCumulative

Earnings

Taxable Earnings


Calculate Deductions





BeginningCumulative

Earnings

Taxable Earnings

Salary ExpenseFederal

Income TaxState

Income TaxSocial

Security Tax Medicare TaxTotal

DeductionsNet

AmountCk. No. Salary Expense

46.00 5.52 29.76 6.96 88.2445.00 5.40 29.14 6.82 86.3685.00 10.20 45.88 10.73 151.8155.00 6.60 33.48 7.83 102.91

238.00 28.56 2.67 20.14 289.3764.00 7.68 0.00 24.51 96.19

533.00 63.96 140.93 76.99 814.88 0.00 0.00

Payroll Register for Week Ended October 14, 2005—page 72PaymentsDeductions


Calculate Payments and Expense





BeginningCumulative

Earnings

Taxable Earnings


Income TaxState

Income TaxSocial


DeductionsNet


46.00 5.52 29.76 6.96 88.24 391.76 714 480.0045.00 5.40 29.14 6.82 86.36 383.64 715 470.0085.00 10.20 45.88 10.73 151.81 588.19 716 740.0055.00 6.60 33.48 7.83 102.91 437.09 717 540.00

238.00 28.56 2.67 20.14 289.37 1,099.63 718 1,389.0064.00 7.68 0.00 24.51 96.19 1,593.81 719 1,690.00

533.00 63.96 140.93 76.99 814.88 4,494.12 5,309.00



Make Journal Entry from Register





BeginningCumulative

Earnings

Taxable Earnings


Income TaxState

Income TaxSocial


DeductionsNet


46.00 5.52 29.76 6.96 88.24 391.76 714 480.0045.00 5.40 29.14 6.82 86.36 383.64 715 470.0085.00 10.20 45.88 10.73 151.81 588.19 716 740.0055.00 6.60 33.48 7.83 102.91 437.09 717 540.00

238.00 28.56 2.67 20.14 289.37 1,099.63 718 1,389.0064.00 7.68 0.00 24.51 96.19 1,593.81 719 1,690.00

533.00 63.96 140.93 76.99 814.88 4,494.12 5,309.00


ExpensePayables


Record Salary Expense


2005Oct. 14 Salary Expense 5,309.00


Date


Record Payables to Make DR = CR



Employees’ Federal Income Tax Payable 533.00Employees’ State Income Tax Payable 63.96FICA Tax Payable 217.92Salaries Payable 4,494.12



Date


Journalize Cash Payments to Employees



Employees’ Federal Income Tax Payable 533.00Employees' State Income Tax Payable 63.96FICA Tax Payable 217.92Salaries Payable 4,494.12


14 Salaries Payable 4,494.12Cash—Payroll Bank Account 4,494.12

Paid wages for week ended Oct. 14, 2005


Date

chapter eight employee earnings and deductions. copyright © houghton mifflin company. all rights...

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