Chapter 14: Chapter 14: Employees, Payroll, and Employees, Payroll, and Account ReconciliationAccount Reconciliation

Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.reserved.

McGraw-Hill/McGraw-Hill/IrwinIrwin

Employees, Payroll, and Employees, Payroll, and Account ReconciliationAccount Reconciliation

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

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Software Objectives, p. 555Software Objectives, p. 555

Complete the Payroll Setup Wizard.Complete the Payroll Setup Wizard.Copy the TAXABLE.DAT file.Copy the TAXABLE.DAT file.Enter employee and employer default information.Enter employee and employer default information.Journalize and post Payroll Journal entries.Journalize and post Payroll Journal entries.Print paychecks.Print paychecks.Reconcile First State Bank Account and the Payroll Checking Reconcile First State Bank Account and the Payroll Checking Account.Account.Compare the vendor ledgers, customer ledgers, and inventory Compare the vendor ledgers, customer ledgers, and inventory valuation report to the associated general ledger accounts.valuation report to the associated general ledger accounts.Print the financial statements.Print the financial statements.Make four backups: two for Joann’s Service Merchandise; two Make four backups: two for Joann’s Service Merchandise; two for the end-of-chapter exercises.for the end-of-chapter exercises.

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Web Objectives, p. 555Web Objectives, p. 555Use your Internet browser to go to the book’s Use your Internet browser to go to the book’s website at website at www.mhhe.com/yacht2009.

Go to the Internet Activity link on the book’s Go to the Internet Activity link on the book’s website. Then, select WEB EXERCISES website. Then, select WEB EXERCISES PART 3. Complete the fourth web exercise in PART 3. Complete the fourth web exercise in Part 3–Salary Calculator. Part 3–Salary Calculator.

Use a word processing program to write a Use a word processing program to write a summary of the websites that you visited.summary of the websites that you visited.

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Peachtree TipsPeachtree TipsThe exercises in Part 3 are cumulative. Exercises 11-1 through The exercises in Part 3 are cumulative. Exercises 11-1 through 13-2 must be completed before starting Exercise 14-1. 13-2 must be completed before starting Exercise 14-1. The Payroll Entry window is the Payroll Journal.The Payroll Entry window is the Payroll Journal.In order for payroll taxes to be computed automatically, In order for payroll taxes to be computed automatically, students need to copy the TAXABLE.DAT file (pages 560-562), students need to copy the TAXABLE.DAT file (pages 560-562), check that the user-maintained payroll tables are included for check that the user-maintained payroll tables are included for Georgia (pages 562-564); establish the payroll account (page Georgia (pages 562-564); establish the payroll account (page 564); set up defaults using the Payroll Setup Wizard (pages 564); set up defaults using the Payroll Setup Wizard (pages 565-569); enter employee and employer default information 565-569); enter employee and employer default information (pages 570-571); and then complete payroll setup (pages 572-(pages 570-571); and then complete payroll setup (pages 572-576).576).If you do If you do notnot want to copy the TAXABLE.DAT file, payroll taxes want to copy the TAXABLE.DAT file, payroll taxes can be entered manually on the Payroll Entry window. Refer can be entered manually on the Payroll Entry window. Refer to textbook pages 583 and 586 for completed payroll taxes. to textbook pages 583 and 586 for completed payroll taxes. The Taxes – Benefits – Liabilities table lists the amount for The Taxes – Benefits – Liabilities table lists the amount for both employee and employer withholdings.both employee and employer withholdings.

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Backing Up Chapter 14Backing Up Chapter 14

Backup Name Backup Name

KBKB Page Nos.Page Nos.

Chapter 14 BeginChapter 14 Begin 1,611 KB1,611 KB 579-580579-580

Chapter 14Chapter 14 1,647 KB1,647 KB 604604

Exercise 14-1Exercise 14-1 1549 KB1549 KB 611611

Exercise 14-2Exercise 14-2 1,586 KB1,586 KB 615615

.

This information is also shown on page 402.

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Chapter 14 TopicsChapter 14 Topics1.1. Software & web objectives, p. 555Software & web objectives, p. 5552.2. Getting started, pp. 559-560Getting started, pp. 559-5603.3. Copying the TAXABLE.DAT file, pages 560-562Copying the TAXABLE.DAT file, pages 560-562

a. User-maintained payroll tables, pages 562-564a. User-maintained payroll tables, pages 562-564b. Establishing the payroll account, p. 564b. Establishing the payroll account, p. 564

3.3. Payroll setup wizard, pp. 565-569Payroll setup wizard, pp. 565-5694.4. Entering employee and employer default information, pp. 570-572Entering employee and employer default information, pp. 570-5725.5. Completing payroll setup, pp. 572-576Completing payroll setup, pp. 572-5766.6. Entering employee maintenance information, pages 577-579Entering employee maintenance information, pages 577-5796.6. Backing up your data, pp. 579-580Backing up your data, pp. 579-5807.7. Payroll entry, pp. 580-587Payroll entry, pp. 580-5878.8. Printing the payroll journal, pp. 588-590Printing the payroll journal, pp. 588-5909.9. Account reconciliation, p. 591Account reconciliation, p. 591

a.a. First State Bank Statement, p. 592First State Bank Statement, p. 592b.b. Payroll Checking Account bank statement, p. 593Payroll Checking Account bank statement, p. 593c.c. Print reports: account reconciliation, accounts receivable, Print reports: account reconciliation, accounts receivable, accounts payable, and inventory, pp. 593-599accounts payable, and inventory, pp. 593-599

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Chapter 14 Topics (concluded)Chapter 14 Topics (concluded)

10.10. Printing the general ledger trial balance, p. 600Printing the general ledger trial balance, p. 60011.11. Printing the financial statements, pp. 601-603Printing the financial statements, pp. 601-60312.12. Backing up Chapter 14 data, p. 604Backing up Chapter 14 data, p. 60413.13. Internet activity, p. 604Internet activity, p. 60414.14. Summary and review, p. 605Summary and review, p. 605

a. Going to the net, pp. 605-606a. Going to the net, pp. 605-606b. Multiple-choice questions, pp. 606-608b. Multiple-choice questions, pp. 606-608c. Exercise 14-1, pp. 609-611c. Exercise 14-1, pp. 609-611d. Exercise 14-2, pp. 611-615d. Exercise 14-2, pp. 611-615e. Analysis question, page 615e. Analysis question, page 615e. Chapter 14 index, p. 616e. Chapter 14 index, p. 616

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Getting started, p. 559Getting started, p. 559

Complete steps 1 – 2e. on page 559.Complete steps 1 – 2e. on page 559.

Remember, you must complete Chapters 11, 12, and 13 Remember, you must complete Chapters 11, 12, and 13 before starting Chapter 14.before starting Chapter 14.

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Copying the TAXTABLE.DAT file, Copying the TAXTABLE.DAT file, pp. 560-561pp. 560-561

Read the information on pages 560-561.Read the information on pages 560-561.

Complete steps 1 and 2 on page 561. Write down the Complete steps 1 and 2 on page 561. Write down the Directory field shown on the Maintain Company Directory field shown on the Maintain Company Information window.Information window.

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Copying the TAXTABLE.DAT file, Copying the TAXTABLE.DAT file, p. 562-564 (concluded) p. 562-564 (concluded)

Complete steps 3 and 4 on page 562. Complete steps 3 and 4 on page 562.

Read the information on pages 562. Complete steps 1-6.Read the information on pages 562. Complete steps 1-6.

To check that you have copied the TAXTABLE.DAT file, To check that you have copied the TAXTABLE.DAT file, refer to steps 1-4, pages 562-564.refer to steps 1-4, pages 562-564.

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Establishing the payroll account, p. 564Establishing the payroll account, p. 564

In order to establish the payroll checking account, In order to establish the payroll checking account, transfer funds from First State Bank (Account No. transfer funds from First State Bank (Account No. 10200) to the Payroll Checking Account (Account No. 10200) to the Payroll Checking Account (Account No. 10300). Read the transaction information on p. 564.10300). Read the transaction information on p. 564.

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Payroll Setup Wizard, pp. 565-569Payroll Setup Wizard, pp. 565-569

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Payroll Setup Wizard, pp. 566-569Payroll Setup Wizard, pp. 566-569The Payroll Options – Do it Yourself In-House window appears. Select Do it Yourself. Click <Next>The Payroll Options – Do it Yourself In-House window appears. Select Do it Yourself. Click <Next>Read the Other Payroll Options, Direct Deposit, and E-Filing areas. Click <Next>. Read the Other Payroll Options, Direct Deposit, and E-Filing areas. Click <Next>. Company Information is selected. The Federal Employer ID, State Employer ID, State (GA), Unemployment ID, and State Unemployment Rate fields Company Information is selected. The Federal Employer ID, State Employer ID, State (GA), Unemployment ID, and State Unemployment Rate fields are automatically completed. These fields agree with the company information entered on page 405 in Chapter 11. The Georgia Administration are automatically completed. These fields agree with the company information entered on page 405 in Chapter 11. The Georgia Administration Assessment Tax rate is shown and No is selected for Do you want to record employee means and tips. Click <Next>Assessment Tax rate is shown and No is selected for Do you want to record employee means and tips. Click <Next>Pay Types is selected. In the Overtime field, select Account No. 77600, Overtime Expense. Check this window carefully. Click <Next>.Pay Types is selected. In the Overtime field, select Account No. 77600, Overtime Expense. Check this window carefully. Click <Next>.The Benefits window appears. Do not make any selections. Click <Next>.The Benefits window appears. Do not make any selections. Click <Next>.The Payroll window appears. Observe that the Tax liability acct no. (23400) and Tax Expense acct no. (72000) is selected. To accept these defaults, The Payroll window appears. Observe that the Tax liability acct no. (23400) and Tax Expense acct no. (72000) is selected. To accept these defaults, click <Next>.click <Next>.The Setup Complete window appears, click Finish.The Setup Complete window appears, click Finish.Click Finish.Click Finish.

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Entering employee and employer Entering employee and employer default information, pp. 570-571default information, pp. 570-571

Read the information on p. 570. From the Employees & Payroll page, click Read the information on p. 570. From the Employees & Payroll page, click then select Set Up Employee Defaults. Observe that GA is shown in the State then select Set Up Employee Defaults. Observe that GA is shown in the State field.field.Complete steps 2-6 on page 570. The Employee Defaults/Employee Fields Complete steps 2-6 on page 570. The Employee Defaults/Employee Fields window is shown on page 571.window is shown on page 571.

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Entering employee and employer default Entering employee and employer default information, pp. 571-573information, pp. 571-573

Click on the Company Fields tab. The Employee Defaults/Company Fields window is shown on p. 572.Click on the Company Fields tab. The Employee Defaults/Company Fields window is shown on p. 572.

Click <OK>. Complete steps 1, 2 and 3 on pages 572-574.Click <OK>. Complete steps 1, 2 and 3 on pages 572-574.

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Assign Company-Paid Tax Fields, pp. 574-575Assign Company-Paid Tax Fields, pp. 574-575

Click .. The Assign Company-Paid Tax Fields Click .. The Assign Company-Paid Tax Fields window appears. These selections appear. (If not, select window appears. These selections appear. (If not, select them.)them.)

Federal Unemployment (FUTA): Fed_Unemp_CFederal Unemployment (FUTA): Fed_Unemp_C

State Unemployment (SUTA):State Unemployment (SUTA): St_Unemp_C St_Unemp_C

Other State Unemployment:Other State Unemployment: St2_Unemp_C St2_Unemp_C

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Assign Employee-Paid State Tax Fields, p. 575Assign Employee-Paid State Tax Fields, p. 575

Click <OK>. You are returned to the Assign Tax Click <OK>. You are returned to the Assign Tax Fields window. Click . Do not Fields window. Click . Do not make any changes. make any changes.

Click on <OK>. You are returned to the Assign Tax Click on <OK>. You are returned to the Assign Tax Fields window. Click <Next>.Fields window. Click <Next>.The Field Order window appears. Do not make any The Field Order window appears. Do not make any changes. Click <Next>.changes. Click <Next>.

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Payroll Settings, p. 576Payroll Settings, p. 576The Setup Complete window appears. The Setup Complete window appears. Read the information. Read the information.

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Entering employee maintenance Entering employee maintenance information, p. 577-580information, p. 577-580

From the Employees & Payroll page, click .From the Employees & Payroll page, click .Select New Employee. The Maintain Employees/Sales Select New Employee. The Maintain Employees/Sales Reps window appears.Reps window appears.Complete the employee information shown on step 2, Complete the employee information shown on step 2, p. 577. p. 577.

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Entering Employee Maintenance Information, p. 577-578Entering Employee Maintenance Information, p. 577-578

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Maintain Employees/Sales Reps window, Maintain Employees/Sales Reps window, pp. 578-579 pp. 578-579

After completing step 6 on page 578, this window shows Pay Info. After completing step 6 on page 578, this window shows Pay Info.

Complete steps 7 – 12 on p. 579.Complete steps 7 – 12 on p. 579.

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Backing up your data, p. 579-580Backing up your data, p. 579-580

Complete steps 1 – 6 on p. 580 to back up Complete steps 1 – 6 on p. 580 to back up your data.your data.

Use Use Chapter 14 BeginChapter 14 Begin as the back up as the back up name.name.

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Payroll Entry, pp. 580-583Payroll Entry, pp. 580-583Read the information on pages 580-582.Read the information on pages 580-582.Complete steps 1 – 8 on pages 581-582 to issue a payroll check. The Complete steps 1 – 8 on pages 581-582 to issue a payroll check. The Payroll Entry window is shown on p. 583.Payroll Entry window is shown on p. 583.

Click <Print>.Click <Print>.

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Print Forms: Payroll Checks, pp. 583-584Print Forms: Payroll Checks, pp. 583-584

Complete step 11 on p. 583. Select OCR Multi-Purpose PR Laser. Complete step 11 on p. 583. Select OCR Multi-Purpose PR Laser. Read the comm584ent on page 583. The Print Forms: Payroll Read the comm584ent on page 583. The Print Forms: Payroll Checks window appears (see page 584).Checks window appears (see page 584).

Click <OK>. Complete steps 12 and 13 on page 584.Click <OK>. Complete steps 12 and 13 on page 584.

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First Check Number, pp. 585First Check Number, pp. 585Type Type 101101 as the First Check Number. The Print Forms: Payroll as the First Check Number. The Print Forms: Payroll Checks window is shown on p. 585 after step 14.Checks window is shown on p. 585 after step 14.

Click <Print>. Compare your check with the one shown on page 585. Click <Print>. Compare your check with the one shown on page 585. Complete steps 16 and 17, p. 586. Then, issue the checks shown in Complete steps 16 and 17, p. 586. Then, issue the checks shown in step 18, p. 587. When through, close the Payroll Entry window.step 18, p. 587. When through, close the Payroll Entry window.

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Printing the payroll journal, pp. 588-590Printing the payroll journal, pp. 588-590

Complete the steps on p. 588.Complete the steps on p. 588.

Compare your payroll journal to the one Compare your payroll journal to the one shown on pp. 588-590.shown on pp. 588-590.

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Account Reconciliation, pp. 591-599Account Reconciliation, pp. 591-599

Read page 591. Peachtree’s Read page 591. Peachtree’s general ledger is integrated general ledger is integrated with other parts of the with other parts of the program.program.The First State Bank The First State Bank Statement is on p. 592.Statement is on p. 592.Payroll Checking Account Payroll Checking Account Bank Statement is on p. 593.Bank Statement is on p. 593.Printing Reports: Account Printing Reports: Account Reconciliation, General Reconciliation, General Ledgers, Customer Ledgers, Ledgers, Customer Ledgers, Vendor Ledgers, and Inventory Vendor Ledgers, and Inventory reports are on pp. 594-599. reports are on pp. 594-599.

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Printing the general ledger trial Printing the general ledger trial balance, p. 600 balance, p. 600

Complete the step on p. 600.Complete the step on p. 600.

Compare your general ledger trial balance Compare your general ledger trial balance to the one shown on p. 600.to the one shown on p. 600.

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Printing the financial statements, Printing the financial statements, pp. 601-603pp. 601-603

Complete the steps on page 601-603.Complete the steps on page 601-603.

Compare your financial statements with Compare your financial statements with the ones shown on pages 601, 602, and the ones shown on pages 601, 602, and 603.603.

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Backing Up Chapter 14 Data, p. 604Backing Up Chapter 14 Data, p. 604

Complete steps 1-6 on page 604.Complete steps 1-6 on page 604.The back up name is The back up name is Chapter 14Chapter 14..

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Glossary of TermsGlossary of TermsChapter 14Chapter 14

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Exemptions, p. 556Exemptions, p. 556

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

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Withholding allowances, p. 556Withholding allowances, p. 556

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

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FICA taxes, p. 556FICA taxes, p. 556

This deduction from wages is also called This deduction from wages is also called the social security tax and provides the social security tax and provides qualified workers who retire at age 62 or qualified workers who retire at age 62 or older with monthly payments from the older with monthly payments from the federal government. A portion of this tax is federal government. A portion of this tax is for Medicare.for Medicare.

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Medicare, p. 556Medicare, p. 556

A portion of FICA taxes (also called social A portion of FICA taxes (also called social security taxes) deducted from wages of security taxes) deducted from wages of qualified workers. Medical benefits called qualified workers. Medical benefits called Medicare are received by retirees after Medicare are received by retirees after reaching age 65.reaching age 65.

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W-2 forms, p. 556W-2 forms, p. 556

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

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Internet Activity, p. 604Internet Activity, p. 60411 Go to the book’s website at Go to the book’s website at www.mhhe.com/yacht2009.

22 Link to Student Edition. Link to Student Edition.

33 In the Course-wide Content list, link to Part 3 Internet Activities In the Course-wide Content list, link to Part 3 Internet Activities for Chapters 11-14. Open or Save. (You can also choose for Chapters 11-14. Open or Save. (You can also choose Chapter 14, then link to Internet Activities. If you Choose a Chapter 14, then link to Internet Activities. If you Choose a Chapter, observe that other chapter-specific links are available; Chapter, observe that other chapter-specific links are available; for example, Quizzes, PowerPoints, and Going to the Net for example, Quizzes, PowerPoints, and Going to the Net Exercises.)Exercises.)

44 Complete the SALARY WIZARD-Chapter 14 exercise. Read Complete the SALARY WIZARD-Chapter 14 exercise. Read steps 1-5. steps 1-5.

55 Follow the steps shown on the book’s website to complete this Follow the steps shown on the book’s website to complete this Internet activity.Internet activity.

66 Using a word processing program, write a brief summary of what Using a word processing program, write a brief summary of what you find. Include all appropriate website addresses.you find. Include all appropriate website addresses.

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Going to the Net, pp. 605-606Going to the Net, pp. 605-606

Access the Employer Reporting and Instructions Access the Employer Reporting and Instructions website at website at http://www.ssa.gov/employer/. Link to . Link to General W-2 Filing Information, then answer these General W-2 Filing Information, then answer these questions.questions.

1.1. What are dates that employers must send W-2 What are dates that employers must send W-2 information to the Social Security Administration? information to the Social Security Administration? (Include the dates for (Include the dates for bothboth electronic and paper electronic and paper filing.)filing.)

2.2. When must employers give employees their W-2? When must employers give employees their W-2? 3.3. What two forms do employers send to the Social What two forms do employers send to the Social

Security Administration?Security Administration?

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