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Payroll Liabilities and Tax Records

Chapter 13. $. Payroll Liabilities and Tax Records. $. Making Accounting Relevant Federal, state, and local governments pass tax laws in order to generate revenue for government services. $. $. Can you name some uses for your tax dollars?. Chapter 13. $.

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Payroll Liabilities and Tax Records

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  1. Chapter 13 $ Payroll Liabilities and Tax Records $ Making Accounting Relevant Federal, state, and local governments pass tax laws in order to generate revenue for government services. $ $ Can you name some uses for your tax dollars?

  2. Chapter 13 $ Section 1 Journalizing and Posting the Payroll $ • What You’ll Learn • How to compute the business payroll deductions. • How to record the payroll entry in the general journal. $ $

  3. Section 1 Journalizing and Posting the Payroll (con’t.) Chapter 13 $ Why It’s Important Payroll deductions are liabilities of the business. It is essential that payroll deductions are journalized and posted in a timely manner. $ $ $ • Key Term • Salaries Expense

  4. Section 1 Journalizing and Posting the Payroll (con’t.) Chapter 13 $ Analyzing the Payroll Transaction • Employee earnings are a normal operating expense of a business. • Various deductions, such as income and FICA taxes, are withheld from gross earnings each pay period. • Net pay is the amount actually paid out in cash by the employer to the employees. $ $ $

  5. Section 1 Journalizing and Posting the Payroll (con’t.) Chapter 13 $ Analyzing the Payroll Transaction con’t. • The employee retains the amounts withheld until it is time to pay the appropriate government agencies and businesses. • The amount withheld but not yet paid are liabilities of the business. $ $ $

  6. Amount actually paid out in cash by the employer to the employees. Section 1 Journalizing and Posting the Payroll (con’t.) Chapter 13 $ Journalizing the Payroll $ JOURNAL ENTRY $ $

  7. Demonstration Problem 13-1

  8. 18 200- May 16 Salaries Expense 4955.30 Employees’ Federal Income Tax Payable 793.-- 99.11 Employees’ State Income Tax Payable Social Security Tax Payable 307.23 Medicare Tax Payable 71.85 Hospital Insurance Premiums Payable 114.50 Union Dues Payable 140.-- Cash in Bank (Net Pay) 3429.61 Payroll Register 5/16 ck #345

  9. Section 1 Journalizing and Posting the Payroll Chapter 13 $ $ Assignment $ $

  10. Section 1 Journalizing and Posting the Payroll (con’t.) Chapter 13 $ Check Your Understanding p321 $ • Thinking Critically 1&2 • Computing in the Business World • Problem 13-1 $ $

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