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Accounting 1 Thursday, January 2, 2020

Accounting 1 Thursday, January 2, 2020. Tony, who works at a furniture store, is paid a salary of $300 a week plus 4% commission of his sales. Tony’s sales last week were $6,120. What was his gross earnings?. Susan Rucker January 2, 2020 Bellwork

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Accounting 1 Thursday, January 2, 2020

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  1. Accounting 1Thursday, January 2, 2020 • Tony, who works at a furniture store, is paid a salary of $300 a week plus 4% commission of his sales. Tony’s sales last week were $6,120. What was his gross earnings?

  2. Susan Rucker January 2, 2020 Bellwork Tony’s gross earnings would be [300 + ($6,120 x .04)] $300 + $244.80 = $544.80

  3. Accounting 1Thursday, January 2, 2020 • Grade Ch12-1 H.W. • Continue with Ch12-2 Lecture and Assignment.

  4. Chapter 12 $ Section 2 Payroll Deductions • What You’ll Learn • Why deductions are calculated and reported. • How to calculate deductions required by the federal government. • How to determine voluntary deductions. $ $ $

  5. Section 2 Payroll Deductions (con’t.) Chapter 12 $ Why It’s Important To prepare the payroll accurately and to comply with the law, both mandatory and voluntary deductions must be calculated correctly. $ $ • Key Terms • deduction • allowance • 401(k) plan $

  6. Section 2 Payroll Deductions (con’t.) Chapter 12 $ Determining Deductions from Gross Earnings $ • An amount that is subtracted from gross earnings is called a deduction. • Deductions include those required by law and those an employee wishes to have withheld from earnings. $ $

  7. Section 2 Payroll Deductions (con’t.) Chapter 12 $ Deductions Required by Law $ • Federal Income Tax • Social Security Tax • State and Local Tax $ $

  8. Section 2 Payroll Deductions (con’t.) Chapter 12 $ Federal Income Tax Form W-4 (Employee’s Withholding Allowance Certificate ie. p294, Figure 12-3). The amount withheld for federal income taxes depends on three factors: $ $ • the employee’s marital status • the number of allowances claimed by the employee • the employee’s gross earnings $

  9. Section 2 Payroll Deductions (con’t.) Chapter 12 $ • Federal Income Tax con’t. • In Form W-4 the employees lists the number of allowances claimed. • An allowance reduces the amount of income tax to be withheld. • The greater the number of allowances claimed by a taxpayer, the lower the amount of income tax withheld from earnings. • A taxpayer is allowed one personal allowance and one allowance for each person the taxpayer supports, such as a child or an elderly parent. • Refer to tax tables on p295. $ $ $

  10. Section 2 Payroll Deductions (con’t.) Chapter 12 $ Social Security Tax There are two FICA taxes: social security and Medicare. The tax rates are as follows (as of 2002): Social security tax 6.20% Medicare tax 1.45% Total FICA taxes 7.65% (Deducted from each employee’s earnings until the maximum taxable earnings amount for the year is reached. This amount increases each year.) $ $ $

  11. Section 2 Payroll Deductions (con’t.) Chapter 12 $ State and Local Income Taxes • In some states and cities, the tax rates are set as a percentage of gross earnings. • In others, the amounts to be deducted are indicated on tables similar to the ones used for federal income tax. $ $ $

  12. Section 2 Payroll Deductions (con’t.) Chapter 12 $ Voluntary Deductions Common voluntary deductions include: $ • union dues • health insurance payments • life insurance payments • pension and other retirement contributions • credit union deposits and payments • U.S. savings bonds • charitable contributions $ $

  13. Demo #4

  14. 28.87 6.75 24.30 5.68 27.80 6.50

  15. Section 2 Payroll Deductions (con’t.) Chapter 12 $ Check Your Understanding p298 $ • Thinking Critically 1&2 • Computing in the Business World • Problem 12-2 & 12-3 • You will need to read this section so as not to miss any details on taxes. I am sure I did not cover everything. $ $

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