Accounting Chapter 8
Calendar Quarter
- 3 month or 13 week time period - 4 quarters occur during year - (Jan 1 - Dec 31) - 1 quarter (Jan-March) - 2 quarter (April-June) - 3 quarter (July-Sept) - 4 quarter (Oct-Dec)
Form 941 Taxes
- FIT - OADSI - Medicare name comes from form used to report these taxes.
Federal Unemployment Tax Act
- Tax paid by EMPLOYERS to federal government - .8% on the first $7,000 of earnings of each employee after the normal SUTA tax credit is applied.
Form 944, Employer's Annual Federal Tax Return
- Used by: Employers - Why: to report FICA taxes and FIT. - When: filed by Jan 31 following end of year. can be used by employers who owe $1,000 or less for these taxes & who have been told by the IRS that they must file this form.
Banking Day
Any day bank is open to public for business. - Federal holidays usually aren't considered banking days
Monthly Depositor
Business makes its payroll tax deposits only 1 each month for amount of Form 941 taxes due from the prior month. (1st day every month)
Semiweekly Depositor
Business makes its payroll tax deposits up to 2 times per week (depending on when payroll is paid)
Week 4
Due by - Fri. of week 2
Week 2
Due by - Wed. of week 2
Entry for paying Tax Liability
FICA OASDI Payable FICA Medicare Payable FIT Payable Cash Employer pays form 941 taxes
What are 5 deductions?
FIT payable SIT payable FICA OASDI payable FICA Medicare payable Wages and Salaries Payable (net pay)
Form SS-4
Form filled out by employer to get an EIN - Sent to IRS which assigns the # to business
Week 3
Payday - Sat -- Tues (Week 2)
Week 1
Payday - Wed. -- Friday
what is the special account for paying payroll?
Payroll Cash
Entry for recording payroll tax expense
Payroll Tax Expense FICA OASDI Payable FICA Medicare Payable FUTA Payable SUTA Payable
Payroll Tax Expense
The cost to the employers - includes total of the employer's : FICA OASDI, FICA Medicare, FUTA, and SUTA taxes.
Employer Identification Number (EIN)
Used by employer - given by the IRS - used when recording and paying payroll and income taxes
Entry for paying the payroll
Wages and Salaries Payable Cash Pay employees
Form 941, Employer's Quarterly Federal Tax Return
When: after end of calendar quarter Why: indicates the total FICA taxes owed + amount of FIT withheld from employees' pay for quarter. Bonus: if entered on time deposited should equal amount due on Form 941. If not: payment due or refund.
FICA OASDI and Medicare match the ....
accounts from employee payroll
Workers' compensation is an.....
asset
As worker's compensation is used up, it becomes an an.....
expense
Form 8109 relates only to Form 940.
false
Form 941 is completed twice a year.
false
Payroll Tax Expense is made up of FICA, SUTA, and FIT.
false
Payroll taxes are recorded as assets for a business.
false
Prepaid Workers' Compensation Insurance is a liability.
false
The normal balance of FIT payable is a debit.
false
Wages and Salaries expense is used to record .......
gross earnings
Wages and Salaries payable is used to record.....
net earnings not paid
Look-back period
period of time used to determine whether a business should make its Form 941 tax deposits on a monthly/semiweekly basis. IRS defines period as July 1 - June 30 of year prior to the year in which Form 941 tax deposits will be made.
A year-end adjusting entry is needed for workers' compensation.
true
Frequency of deposits relating to Form 941 is based on amount of tax liability in look - back periods.
true
The individual earnings record provides the data to prepare W-2s.
true