8
Paying the Payroll,
Depositing Payroll
1. Better internal control, bank reconciliation is easier and manage cash more
effectively.
2. Deposit the total net pay amount into the payroll account. Debit Cash-Payroll
Checking and credit Cash – Regular Checking.
4. The look-back period is the 12-month period that starts July 1 two years prior to the tax
year in question.
5. The employer is classified as a monthly or semi-weekly depositor depending on how
6. Unless an employer pays Form 941 taxes of less than $2,500 per quarter, the employer
8. The two amounts are equal at all times.
10. Part 1, Line 1a of form 940 is used to show the state in which payments are made, if only one
11. Employer “A” does not have to make a FUTA tax deposit until its liability reaches $500.00 or
12. Because employer “B” has a FUTA tax liability in excess of $500.00 at this time, it should
13. The employee completes Form W-4 when starting work for a new employer or when his or
15. When Happy takes taxes out of its employee’s pay, it owes these to the federal, state, and
SOLUTIONS TO CONCEPT CHECKS
1.
A.
July-Sept.
3rd Quarter 200A
B.
Oct.-Dec.
4th Quarter 200A
C.
Jan.-
March
1st Quarter 200B
D.
Apr.-June
2nd Quarter 200B
3. The total of the look–back period is $43,300. Thus, Glenda is classified as a monthly depositor.
4.
Payroll Paid
Tax Paid By
November
December 15
On Wednesday
Wednesday next week
On Thursday
Wednesday next week
On Friday
Wednesday next week
On Saturday
Friday next week
On Sunday
Friday same week
On Monday
Friday same week
5.
Items
Account Titles
2, 5
a. FICA OASDI Payable
3, 4
b. Office Salaries Expense
2, 5
c. Federal Income Tax Payable
2, 5
d. FICA Medicare Payable
2, 5
e. Wages and Salaries Payable
SOLUTIONS TO SET A EXERCISES
8A-1.
Cash – Payroll Checking
4
1
2
5
Cash – Regular Checking
4
1
2
5
Wages & Salaries Payable
4
1
2
5
Cash – Payroll Checking
4
1
2
5
EXERCISES (CONTINUED)
8A–4.
Nov.
15
FICA OASDI Payable
1
0
6
0
00
FICA Medicare Payable
4
2
0
00
FIT Payable
2
9
7
0
00
Cash
4
4
5
0
00
EXERCISES (CONTINUED)
8A-8.
Jul.
3
FICA OASDI Payable
8
2
0
00
FICA Medicare Payable
2
6
0
00
FIT Payable
3
0
0
5
00
Cash
4
0
8
5
00
31
SUTA Payable
6
1
6
00
Cash
6
1
6
00
NOTE: No FUTA tax deposit is required.
SOLUTIONS TO SET B EXERCISES
8B-1.
Cash – Payroll Checking
5
4
2
5
Cash – Regular Checking
5
4
2
5
Wages & Salaries Payable
5
4
2
5
Cash – Payroll Checking
5
4
2
5
EXERCISES (CONTINUED)
8B–4.
Sep.
15
FICA OASDI Payable
1
1
4
0
00
FICA Medicare Payable
4
6
0
00
FIT Payable
2
9
6
0
00
Cash
4
5
6
0
00
Since ABC Inc., is a monthly depositor, its deposits will be due 15 days after August ends.
EXERCISES (CONTINUED)
8B-5.
Line 3
Total payments to all employees
$273,600
Line 4
Payments exempt from FUTA tax
0
Line 5
Total of payments made to each
employee in excess of $7,000
$231,600
Line 6
Subtotal = Line 4 + Line 5
$231,600
Line 7
Total taxable FUTA wages
$42,000
Line 8
FUTA tax before adjustments
$252
Total annual payroll for the year
$273,600
Payments made in excess of $7,000
FUTA limits
$231,600
Total FUTA liability before any
adjustments
$252
8B-6.
Total 941 payroll tax deposits paid during the look–back period is $57,299.11. Joan’s Grocery
Store pays $50,000 or more in Form 941 taxes during the IRS look–back period; therefore, it must
be classified as a semiweekly depositor for 201C.
8B-7.
Total 941 payroll tax deposits paid during the look–back period is $49,397.73. Joan’s Grocery
SOLUTIONS TO SET A PROBLEMS
PROBLEM 8A-1
(1)
Jan.
31
Payroll Tax Expense
1
2
4
8
53
FICA Medicare Payable
1
2
9
78
FICA OASDI Payable
5
5
4
90
FUTA Tax Payable
5
3
70
SUTA Tax Payable
5
1
0
15
Record Employer’s Payroll Tax
FICA Medicare Payable
1
3
6
16
FICA OASDI Payable
5
8
2
18
FUTA Tax Payable
5
2
02
SUTA Tax Payable
4
9
4
19
Record Employer’s Payroll Tax
Mar.
31
Payroll Tax Expense
8
2
6
FICA Medicare Payable
1
2
6
30
FICA OASDI Payable
5
4
0
02
FUTA Tax Payable
1
5
24
SUTA Tax Payable
1
4
4
78