Case Problem -
In August, the third month of business for Olivia's Web Solutions, Olivia Chen has decided to hire two employees. To prepare for this, Olivia wishes to set up the payroll feature. The company file includes information for Olivia's Web Solutions as of August 1, 2017.
1. Open the company file CH8 Olivia's Web Solutions.QBW.
2. Make a backup copy of the company file and name it OWS8 [Your Name] Olivia's Web Solutions.
3. Restore the backup copy of the company file. In both the Open Backup Copy and Save Company File as windows, use the file name OWS8 [Your Name] Olivia's Web Solutions.
4. Change the company name to OWS8 [Your Name] Olivia's Web Solutions.
5. Activate the payroll feature for Olivia's Web Solutions.
6. Customize the system default accounts:
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QuickBooks
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Edited
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Number
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Account Name
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Number
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24000
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Payroll Liabilities
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2100
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66000
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Payroll Expenses
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6560
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7. Add the following accounts to the Chart of Accounts List:
- 2110 - Social Sec/Medicare Tax Payable - Subaccount of 2100 Payroll Liabilities
- 2115 - SIT Payable - Subaccount of 2100 Payroll Liabilities
- 2120 - SIT Payable - Subaccount of 2100 Payroll Liabilities
- 2125 - FUTA Payable - Subaccount of 2100 Payroll Liabilities
- 2130 - SUI Payable - Subaccount of 2100 Payroll Liabilities
- 6565 - Salaries arid Wages Expense - Subaccount of 6560 Payroll Expenses
- 6611 - Social Sec/Medicare Tax Expense - Subaccount of 6560 Payroll Expenses
- 6625 - FUTA Expense - Subaccount of 6560 Payroll Expenses
- 6630 - SUI Expense - Subaccount of 6560 Payroll Expenses
8. Select the manual payroll calculations option.
9. Customize each of the payroll items listed below. For each item, proceed as follows:
- Accept the name listed.
- Choose United States Treasury as the agency to which the liability will be paid.
- Select the liability and expense accounts indicated below.
- Accept all tax rates.
- Accept all taxable compensation default.
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Payroll Item
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Liability Account
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Expense Account
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Federal Unemployment
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2125 FUTA Payable
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6625 FUTA Expense
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Federal Withholding
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2115 FIT Payable
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Medicare Company
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2110 Social Sec/Medicare Tax Payable
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6611 Social Sec/Medicare Tax Expense
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Medicare Employee
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2110 Social Sec/Medicare Tax Payable
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6611 Social Sec/Medicare Tax Expense
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Social Security Company
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2110 Social Sec/Medicare Tax Payable
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6611 Social Sec/Medicare Tax Expense
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Social Security Employee
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2110 Social Sec/ Medicare Tax Payable
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6611 Social Sec/ Medicare Tax Expense
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10. Add the following payroll items:
Salary
- Payroll Item Type: Wage (Hourly Wages, Annual Salary, Commission, Bonus)
- Payroll Item Subtype - Wages: Annual Salary
- Wages: Regular Pay
- Name: Salary
- Expense Account: 6565 Salaries and Wages Expense
Wages
- Payroll Item Type: Wage (Hourly Wages, Annual Salary, Commission, Bonus)
- Payroll Item Subtype - Wages: Hourly Wages
- Wages: Regular Pay
- Name: Hourly Wages
- Expense Account: 6565 Salaries and Wages Expense
State Tax Withholding
- Payroll Item Type: State Tax (State Withholding, SDI, SUI)
- State: NY
- Payroll Item Subtype - Stare Tax: State Withholding
- Name Used on Paychecks: NY - Withholding
- Agency for liabilities: NYS Tax Department
- Identifying Number: 55-5656566
- Liability Account: 2120 SIT Payable
- Taxable Compensation: Accept defaults
SUI
- Payroll Item Type: State Tax (State Withholding, SDI, SUI)
- State: NY
- Payroll Item Subtype - Stare Tax: State Unemployment
- Name Used on Paychecks: NY - Unemployment Company
- Agency for liabilities: NYS Tax Department
- Identifying Number: ER-4877
- Liability Account: 2130 SUI Payable
- Expense Account: 6630 SUI Payable
- Company Tax Rate: 4.025% each quarter (or accept the default)
- Taxable Compensation: Accept defaults
11. Display and print the Payroll Item Listing report.