12-4 Application Problem

Preparing Payroll Checks

The instructions that follow demonstrate how to:

Start QuickBooks Premier Accountant 2012.

Restore the starting data.

Journalize and post payroll transactions.

Print the May 15, 2011 journal.

Back up QuickBooks data.

Use the following instructions to start QuickBooks and restore the starting data for Castle Electronics. Castle Electronics is set up as a corporation. All student files include company data and end with a QBM extension. A QuickBooks file with the QBM extension is a compressed version of the company file.

Getting Started

  1. Start QuickBooks.
  2. Restore the 12-4 AP.QBM student company file.
  3. Verify the Castle Electronics – QuickBooks Accountant 2012 title bar appears.
  4. Before recording transactions for Castle Electronics look at the company information window. This window allows you to record all the contact information associated with your company as well as company identification information and payroll tax information.
  5. The student company file, 12-4 AP.QBM, includes the chart of accounts. From the menu bar, select Lists; Chart of Accounts to become familiar with the accountsthat are required for recording transactions.
  6. Close the chart of accounts window by clicking on the title bar.

JOURNALIZING PAYROLL TRANSACTIONS

Castle Electronics’ net payroll for the semimonthly pay period ended May 15, 2011, is $7,498.80. Payroll checks are prepared on May 15, 2011.

Payroll information for two employees is shown below. Use this information to journalize and post transactions in the Write Checks window. Detailed steps are shown below for the first employee, Mitchell R. Haynes.

Before journalizing and posting the payroll transactions, establish the payroll account. Use the following transaction information:

DateTransaction

May 15Make a check payable to The Peoples Bank, Payroll Account 518-481-148 (Account No. 1115) for $7,498.80, Check No. 1056. This is the total net pay for May 15, 2011.

  1. Use QuickBooks’ Write Checks window to journalize the May 15 transaction to establish the payroll account; Check No. 1056 in the amount of $7498.80
  2. Display the Home page. (Hint: From the icon bar, click).
  3. In the Banking area of the Home page, click . (Or, from the menu bar, select Banking; Write Checks). The Write Checks – Cash window appears.
  4. In the Pay to the Order of field type Payroll Account.

  1. When the Name Not Found window appears, click .
  2. The Select Name Type window appears. Select the radio button to the left of Other. Click .
  3. Uncheck the box to the left to To be printed.
  4. In the Date field, type 05/15/2011.
  5. In the Memo field, type 518-481-148.
  6. In the Account field, select 1115 – Payroll Checking Account
  7. In the Amount field, type 7498.80.
  8. Compare your screen to the one shown below.

  1. Click .

DateTransaction

May 15Mitchell R. Haynes

Check No. 658

Regular Earnings $1280.00

Overtime Earnings 60.00

Deductions:

Federal Income Tax $71.00

Social Security Tax 83.08

Medicare Tax 19.43

Health Insurance 50.00

Retirement 25.00

  1. If necessary, open the Write Checks window. In the Bank Account field, select 1115 – Payroll Checking Account.
  2. In the Pay to the Order of field, type Mitchell R. Haynes. (Add as an Employee).
  3. Uncheck the box to the left of To be printed.
  4. In the No. field, type 658.
  5. If necessary, type 05/15/2011 in the Date field.
  6. In the Account field, select 6150 – Salary Expense.
  7. In the Amount field, type 1280.00.
  8. Complete the following fields. Make sure that you put minus signs in front of each amount deducted.

DescriptionGL AccountUnit Price

Overtime earnings6155 60.00

Federal income tax2120 -71.00

Social security tax2135 -83.08

Medicare tax2140 -19.43

Health insurance2160 -50.00

Retirement2165 -25.00

  1. Click .
  2. Journalize and post the following transaction.

DateTransaction

May 15Sharon V. Bricken

Check No. 659

Regular earnings $1,160.00

Overtime earnings 36.98

Deductions:

Federal income tax $86.00

Social security tax 74.21

Medicare tax 17.36

Health insurance 65.00

Retirement 40.00

  1. Print the May 15, 2011 Journal.
  2. Print the Trial Balance, as of May 31, 2011.
  3. Back up. The suggested file name is 12-4 Application Problem.QBM.

Journal Check Figures: