Chapter 14: Payroll

1
Chapter 14 Payroll
2
Payroll

• Employees and employers are required to pay
  local, state, and federal payroll taxes.
  Employers must withhold taxes from each
  employees paycheck. The amount withheld for
  federal taxes is determined from tax tables
  published by the IRS.
• The amount withheld depends on the employees
  earnings and the number of exemptions or
  withholding allowances claimed by the employee.
  FICA taxes and Medicare taxes are also deducted
  from employees paychecks.
• It is the purpose of Chapter 14 to show you how
  to use Peachtree to enter payroll default
  information, add employees, make the correct
  journal entries for payroll, and to print payroll
  reports.

3
Software Objectives, p. 507

• Explore the Payroll Setup Wizard.
• Enter initial payroll fields.
• Enter employee and employer default information.
• Journalize and post payroll journal entries.
• Print paychecks.
• Print financial statements
• Make four backups two for Matt's Service
  Merchandise two for the end-of-chapter exercises.

4
Web Objectives, p. 507

• Use your Internet browser to go to the books
  website at www.mhhe.com/yacht2004
• Go to the Internet Activity link on the books
  website. Then, select WEB EXERCISES PART 3.
  Complete the fourth web exercise in Part 3, The
  Salary Calculator.
• Use a word processing program to write summaries
  of the websites that you visited

5
Peachtree Tips

• The exercises in Part 3 are cumulative. Chapters
  11, 12 and 13 must be completed before starting
  Chapter 14.
• Restore the Chapter 13.ptb back up made on pp.
  501-502 to start Chapter 14.
• The Payroll Entry window is the Payroll Journal.
• The educational version of the software included
  with the textbook includes payroll tax
  withholding tables for the 50 states. The
  withholding amounts are for example purposes only
  and do not reflect accurate payroll taxes.
• To learn more about Peachtree Softwares payroll
  tax service, visit their website at
  www.peachtree.com/taxtable.

6
Peachtree Tips (concluded)

• Follow these steps to check the Peachtree version
  and tax table version.
• Start Windows, then Peachtree. Open any company.
• From the menu bar, click on Help About Peachtree
  Accounting. The Installed Tax Service shows
  19000101.

7
Backing Up Chapter 14
Disk Backup Name KB Page Nos.
7 of 9 A\Chapter 14 Begin 494KB 525
A\Chapter 14 512KB 539
8 of 9 A\Exercise 14-1 474KB 545
A\Exercise 14-2 494KB 546

• .

8
Chapter 14 Topics

• Software web objectives, p. 507
• Getting started, pp. 510-511
• a. Checking your global tax table version, pp.
  511-512
• b. Establishing the payroll account, p. 513
• Initial payroll fields, pp. 513-517
• Entering Employee and Employer Default
  Information, pp. 517-522
• Entering employee maintenance information,
• pp. 522-525
• 6. Backing up your data, p. 525
• 7. Payroll entry, pp. 526-531
• Printing the payroll journal, pp. 531-534
• Printing the general ledger trial balance, pp.
  535-536

9
Chapter 14 Topics (concluded)

• Printing the financial statements, pp. 536-538
• Backing up Chapter 14 data, p. 539
• Internet activity, p. 539
• Summary and review, p. 540
• a. Going to the net, p. 540
• b. Multiple-choice questions, pp. 541-543
• c. Exercise 14-1, pp. 543-546
• d. Exercise 14-2, p. 546
• e. Chapter 14 index, p. 548

10
Getting started, pp. 510-511

• Complete steps 1 2i. on pages 510-511.
• Remember, you must complete Chapters 11, 12, and
  13 before starting Chapter 14.

11
Checking Your Global Tax Table Version, p. 512

• From the menu bar, click on Help About Peachtree
  Accounting. The Peachtree Complete Accounting
  2004 screen appears.
• Read the information on page 512. Click on ltOKgt
  to close this window.

12
Establishing the payroll account, p. 513

• 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. 513.

13
Payroll Setup Wizard, p. 513-514

• Click on Maintain Default Information, Payroll
  Setup Wizard. This screen is shown on p. 514.
• Click on ltNextgt. Read step 2, p. 514. Click
  ltNextgt.

14
Payroll Setup Wizard, continued, p. 515

• Complete steps 4 and 5 on p. 515. In the State
  box, select CA. Type 3.4 in the Unemployment
  Percent box.

15
Payroll Setup Wizard, continued, p. 516

• Click ltNextgt. The Default Payroll G/L Accounts
  screen appears.
• You will make changes to these defaults on page
  522 and 523. Complete steps 7-12 on pages 516 and
  517.

16
Entering employee and employer default
information, pp. 517-518

• Read the information on p. 517.
• Click on Maintain Default Information,
  Employees. Complete steps 1 and 2 on p. 517. This
  screen is shown on p. 518.
• Click on ltOKgt.

17
Assign Payroll Fields for EmployEE Paid Taxes, p.
518

• Click on the arrow next to EmployEE Paid Taxes.
  This screen is shown on p. 518.
• Click on ltOKgt.

18
Assign Payroll Fields for EmployER Paid Taxes, p.
519

• Click on the arrow next to EmployER Paid Taxes.
  Click on the down-arrow in the SDI field.
• Click on ltOkgt to return to the Employee Defaults
  window. Then, select the Pay Levels tab.

19
Employee Defaults, p. 519

• Make sure you have selected the Pay Levels tab on
  the Employee Defaults window. Then for Overtime,
  select Account No. 77600, Overtime Expense. This
  screen is shown on p. 525.

20
Employee Defaults (continued) p. 520

• Complete steps 1017 on p. 520. This screen is
  shown below step 17, p. 520

21
EmployER Fields tab, pp. 521-522

• Complete step 18 on p. 521. This screen is shown
  below step 18 on p. 521.
• On p. 522, complete step 19 by clicking on ltOKgt
  to save your changes and return to the menu bar.

22
Entering employee maintenance information, pp.
522-523

• Click on Maintain Employees/Sales Reps. Complete
  steps 1 and 2 on p. 522.

23
Maintain Employees/Sales Reps, p. 523

• Click on the Withholding Info tab. Complete the
  information shown on p. 523.
• Complete steps 4 6 on pp. 523.

24
Maintain Employees/Sales Reps, p. 524

• After completing step 6 on page 523, this screen
  shows Pay Info.
• Complete steps 7 12 on pp. 524-525.

25
Backing up your data, p. 525

• Complete steps 1 9 on page 525 to back up your
  data.
• Use Chapter 14 Begin as the back up name.

26
Payroll Entry, pp. 526-528

• Read the information on pages 526-527.
• Complete steps 1 9 on pages 527-528 to issue a
  payroll check. The Payroll Entry screen is shown
  on p. 528.
• Click on the Print icon.

27
Print Forms Payroll Checks, pp. 528-529

• Complete step 11 on p. 528. Highlight OCR - PR
  Preprint 1 Stub. Read the comment on page 529.
  The Preview Forms Payroll Checks screen is shown
  on p. 529
• Click ltOKgt.

28
First Check Number, p. 529-531

• Type 101 as the First Check Number. This screen
  is shown on p. 529 under step 14.
• Click on ltPrintgt. Compare your check with the one
  shown on page 530. Complete steps 16 and 17 on p.
  530. Compare your check with the one shown on p.
  531. Then, issue the checks shown in step 18.

29
Printing the payroll journal, p. 532-534

• Complete steps 1 and 2 on p. 532.
• Compare your payroll journal to the one shown on
  pp. 532-534.

30
Printing the general ledger trial balance, p.
534-535

• Complete steps 1 and 2 on p. 534.
• Compare your general ledger trial balance to the
  one shown on p. 535.

31
Printing the financial statements, pp. 536-538

• Complete steps 1-3 on pp. 536-538.
• Compare your financial statements with the ones
  shown on pages 536, 537, and 538.

32
Backing Up Chapter 14 Data, p. 539

• Complete steps 1-9 on page 539.
• The back up name is Chapter 14.
• Click on ltOkgt. Compare your check to the one
  shown on p. 381. Record the additional payments
  shown on p. 382.

33
Glossary of TermsChapter 14
34
Exemptions, p. 507

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

35
Withholding allowances, p. 507

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

36
FICA taxes, p. 508

• 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.

37
Medicare, p. 508

• 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.

38
W-2 forms, p. 508

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

39
Internet Activity, p. 539
1 Go to the books website at www.mhhe.com/yacht2004
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 books 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.
40
Going to the Net, p. 540

• Access the Employer Reporting and Instructions
  website at www.ssa.gov/employer/ Link to General
  W-2 Filing Information, then answer these
  questions.
• What are dates that employers must send W-2
  information to the Social Security
  Administration? (Include the dates for both
  electronic and paper filing.)
• When must employers give employees their W-2?
• What two forms do employers send to the Social
  Security Administration?