Embed Size (px)
Citation preview
College
Accounting
Heintz & Parry20th Edition
Chapter 8Payroll
Accounting:
Employee
Earnings and
Deductions
1
Distinguish between
employees and
independent contractors.
• Payroll costs are major expenditures for
most businesses
– Records provide data for analyzing and
controlling these expenditures
• Laws require records to be kept
– For the business as a whole
– For each employee
• Work under the control and direction of an
employer
– Examples:
• Secretaries
• Sales Clerks
• Plant Supervisors
• Maintenance Workers
• Perform services for a fee and do not work
under the control and direction of the
company paying for the services
– Examples
• Lawyers
• Public Accountants
• Real Estate Agents
• Employees involve:
– More laws and regulations
– Taxes that must be deducted
– Payroll records to maintain
– Numerous reports to file
• Only one form must be filed for
independent contractors
– Form 1099
2
Calculate employee
earnings and deductions.
• Salaries
– Compensation for managerial or
administrative services
– Expressed in biweekly, monthly, or
annual terms
• Wages
– Compensation for skilled and unskilled
labor
– Expressed in terms of hours, weeks, or
units produced
• Fair Labor Standards Act (FLSA)
– Requires employers to pay overtime
(1½ times the regular rate) to any
hourly employee who works over 40
hours in a week
– Some salaried employees are exempt
from the FLSA rules
• When compensation is based on time, a
record must be kept of the time worked by
each employee
– Examples:
• Time cards, plastic cards or badges with
special magnetic strip barcodes
• The hours worked are multiplied by the
rate of pay to determine total earnings
EXAMPLE: Helen Kuzmik worked 55 hours this week. Kuzmik’s regular rate of pay is $12 per hour. She is paid 1½ times the
regular rate for hours in excess of 8 on Monday through Friday and any hours worked on Saturday, and twice the regular rate for
hours on Sunday. Helen worked 4 hours on Sunday.
40 hours × $12 per hour = $480
$12 × 1½ = $18 overtime rate
11 hours × $18 per hour = $198
40 hours × $12 per hour =
11 hours × $18 per hour =
4 Sunday hours, twice the regular rate($12 × 2 = $24 Sunday rate)
$480
198
96
EXAMPLE: Helen Kuzmik worked 55 hours this week. Kuzmik’s regular rate of pay is $12 per hour. She is paid 1½ times the regular rate for hours in excess of 8 on Monday through Friday and any hours worked on Saturday, and
twice the regular rate for hours on Sunday. Helen worked 4 hours on Sunday.
4 hours × $24 per hour =
40 hours × $12 per hour =11 hours × $18 per hour =
Also called ―gross pay.‖
4 hours × $24 per hour =
$480
19896
EXAMPLE: Helen Kuzmik worked 55 hours this week. Kuzmik’s regular rate of pay is $12 per hour. She is paid 1½ times the regular rate for hours in excess of 8 on
Monday through Friday and any hours worked on Saturday, and twice the regular rate for hours on
Sunday. Helen worked 4 hours on Sunday.
Total earnings for the week $774
EXAMPLE: Linda Swaney has a salary of $2,288 a month plus 1½ times the regular hourly rate for hours in excess of 40 per
week.
In order to compute her overtime rate, we must determine her regular
hourly rate.
Step #1—Determine her annual salary.
$2,288 per month × 12 months
= $27,456 annual pay
EXAMPLE: Linda Swaney has a salary of $2,288 a month plus 1½ times the regular hourly rate for hours in excess of 40 per
week.
Step #2—Determine her weekly salary.
$27,456 annual salary ÷ 52 weeks
= $528.00 pay per week
EXAMPLE: Linda Swaney has a salary of $2,288 a month plus 1½ times the regular hourly rate for hours in excess of 40 per
week.
Step #3—Compute regular hourly pay.
$528 per week ÷ 40 hours per week
= $13.20 pay per regular hour
EXAMPLE: Linda Swaney has a salary of $2,288 a month plus 1½ times the regular
hourly rate for hours in excess of 40 per week.
Step #4—Compute overtime rate.
$13.20 per hour × 1½
= $19.80 overtime pay per hour
EXAMPLE: Linda Swaney has a salary of $2,288 a month plus 1½ times the regular
hourly rate for hours in excess of 40 per week.
• Three categories:
– Federal (and possibly state and city)
income tax withholding
– Employee FICA tax withholding
– Voluntary deductions
• Gross pay – Deductions = Net pay
– Also called take-home pay
• Required by federal law
• Applied toward the payment of the
employee’s federal income tax
• Amount withheld determined by:
– Total earnings
– Marital status
– Number of withholding allowances
claimed
– Length of the pay period
• Exempt a specific dollar amount of an
employee’s gross pay from federal income
tax withholding
• Computed on Form W-4 Employee’s
Withholding Allowance Certificate
– Based on the marital status and the
number of allowances claimed
• In general, each employee is permitted one
personal withholding allowance, one for a
spouse who does not also claim an
allowance, and one for each dependent
EXAMPLE: Ken Istone, who is married and claims 6 allowances, has gross earnings of
$545 for the week ending December 19, 20--. Determine the amount of federal income tax
to be withheld using the wage-bracket method.
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
If the wages are—
At leastBut less
than
And the # of withholding allowances claimed is—
The amount of income tax to be withheld is—
$ 390 $ 400
400 410
540 550
550 560
560 570
570 580
580 590
630 640
640 650
0
24
25
44
46
47
49
50
58
59
1 2 3 4 5 6 7 8 9 10
18
19
35
36
38
39
41
48
50
12
26
27
28
30
31
39
40
5
6
20
21
22
23
24
29
31
0 0 0 0 0 0 0
0 0 0 0 0
000
0 0
14 7 1 0
15
16
17
18
23
24
8
9
10
11
16
17
2 0 0 0 0
3 0 0 00
4 0 0
5 0 0
0 0
0 0
11
10 4 0 0 0
11 5 0 0 0
Step #1 Find the row for
wages of ―at least $540,but less than $550.‖
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
If the wages are—
At leastBut less
than
And the # of withholding allowances claimed is—
The amount of income tax to be withheld is—
$ 390 $ 400
400 410
540 550
550 560
560 570
570 580
580 590
630 640
640 650
0
24
25
44
46
47
49
50
58
59
1 2 3 4 5 6 7 8 9 10
18
19
35
36
38
39
41
48
50
12
26
27
28
30
31
39
40
5
6
20
21
22
23
24
29
31
0 0 0 0 0 0 0
0 0 0 0 0
000
0 0
14 7 1 0
15
16
17
18
23
24
8
9
10
11
16
17
2 0 0 0 0
3 0 0 00
4 0 0
5 0 0
0 0
0 0
11
10 4 0 0 0
11 5 0 0 0
Step #2 Find the column headed ―6
withholding allowances.‖
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
If the wages are—
At leastBut less
than
And the # of withholding allowances claimed is—
The amount of income tax to be withheld is—
$ 390 $ 400
400 410
540 550
550 560
560 570
570 580
580 590
630 640
640 650
0
24
25
44
46
47
49
50
58
59
1 2 3 4 5 6 7 8 9 10
18
19
35
36
38
39
41
48
50
12
26
27
28
30
31
39
40
5
6
20
21
22
23
24
29
31
0 0 0 0 0 0 0
0 0 0 0 0
000
0 0
14 7 1 0
15
16
17
18
23
24
8
9
10
11
16
17
2 0 0 0 0
3 0 0 00
4 0 0
5 0 0
0 0
0 0
11
10 4 0 0 0
11 5 0 0 0
Step #3 Find the amount where they
cross. This is the amountto be withheld.
• Includes amounts for:
– Social Security
• Provides pension and disability benefits
– Medicare
• Provides health insurance
• Required by the Federal Insurance
Contributions Act (FICA)
• Tax rates are set by Congress
– Social Security
• 6.2% on maximum earnings of $106,800
– Medicare
• 1.45% on ALL earnings; there is no
maximum
• Rates can be changed annually by
Congress
EXAMPLE: Sarah Cadrain had earnings of $1,600 for the December 6–12 pay period,
bringing her earnings year-to-date to $105,540.
Sarah’s earnings have not yet reachedthe maximum of $106,800.
ALL of her earnings for this week are subject to Social Security and Medicare tax.
EXAMPLE: Sarah Cadrain had earnings of $1,600 for the December 6–12 pay period,
bringing her earnings year-to-date to $105,540.
$1,600
Gross Pay × Tax Rate Tax
Social Security 6.2%
Medicare 1.45%
$ 99.20
23.20
$122.40
=
EXAMPLE: The following week Cadrain earns $1,660, bringing her earnings year-to-date to $107,200 (over the Social Security maximum).
$107,200.00Year-to-date earnings
106,800.00Social Security maximum
Amount not subject to S.S. tax $ 400.00
EXAMPLE: The following week Cadrain earns $1,660, bringing her earnings year-to-date to
$107,200 (over the Social Security maximum).
$1,660.00Gross pay
400.00Amount not subject to S.S. tax
Amount subject to S.S. tax $ 1,260.00Tax rate 6.2%
Social Security tax $ 78.12
EXAMPLE: The following week Cadrain earns $1,660, bringing her earnings year-to-date to $107,200 (over the Social Security maximum).
$1,660.00Gross pay
Since Medicare has no maximum earnings, all of Cadrain’s gross
pay is subject to the Medicare tax.
EXAMPLE: The following week Cadrain earns $1,660, bringing her earnings year-to-date to $107,200 (over the Social Security maximum).
$1,660.00Gross pay
Tax rate 1.45%
Medicare tax $ 24.07
Sarah’s total FICA tax is $102.19($78.12 S.S. + $24.07 Med.)
• Deductions that are optional and depend on specific agreements between the employee and employer
• Examples:
– U.S. savings bond purchases
– Health insurance premiums
– Credit union deposits
– Pension plan payments
– Charitable contributions
EXAMPLE: Compute the net pay of Ken Istone for the week ended December 19. His health
insurance premiums are $10 per week.
Gross pay
Deductions:
Federal income tax withholding $ 1.00
$545.00
From the wage bracket withholding tables
EXAMPLE: Compute the net pay of Ken Istone for the week ended December 19. His health
insurance premiums are $10 per week.
Gross pay
Deductions:
Federal income tax withholding $ 1.00
Social Security tax withholding 33.79
$545.00
All his pay is subject to S.S. tax($545 × 6.2%)
EXAMPLE: Compute the net pay of Ken Istone for the week ended December 19. His health
insurance premiums are $10 per week.
Gross pay
Deductions:
Federal income tax withholding $ 1.00
Social Security tax withholding 33.79
Medicare tax withholding 7.90
$545.00
EXAMPLE: Compute the net pay of Ken Istone for the week ended December 19. His health insurance
premiums are $10 per week.
Gross pay
Deductions:
Federal income tax withholding $ 1.00
Social Security tax withholding 33.79
Medicare tax withholding 7.90
Health insurance premiums 10.00
Total deductions 52.69Net pay
$545.00
$492.31
3
Describe and prepare
payroll records.
• Should provide the following information
on each employee
– Name, address, occupation, social security
number, marital status, and number of
withholding allowances
– Gross amount of earnings, date of payment,
period covered by each payroll
– Gross amount of earnings accumulated for the
year
– Amounts of taxes and other items withheld
Three types:
PAYROLLREGISTER
PAYROLL CHECKwith earnings statement
EMPLOYEEEARNINGSRECORD
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
ALLOW.
# MARITAL
STATUS
NAME
EARNINGS
REGULAR OVER-
TIME
TOTAL
A payroll register is a form usedto assemble the data required
at the end of each payroll period.
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
ALLOW.
# MARITAL
STATUS
NAME
Cadrain, Sarah 4 M
EARNINGS
REGULAR OVER-
TIME
TOTAL
Since marital status andnumber of allowances are
used to compute withholding taxes, they are recorded on the payroll register.
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
ALLOW.
# MARITAL
STATUS
NAME
Cadrain, Sarah 4 M
EARNINGS
REGULAR OVER-
TIME
1,600.00 60.00
TOTAL
1,660.00
Earnings for this periodare shown, categorized by
regular and overtimeearnings.
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
TOTAL
EARNINGS
107,200.001,660.00
CUMULATIVE
TOTAL
TAXABLE EARNINGS
UNEMPLOYMENT
COMP.
SOCIAL
SECURITY
1,260.00
This pay period has taken Cadrain’s earningsabove the Social Security maximum.
As computed earlier, only $1,260 of this period’s earnings is subject to the
Social Security tax.
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
FEDERAL
INCOME TAX
78.12184.00
SOC. SEC.
TAX
MEDICARE
TAX
24.07
HEALTH
INSURANCE
UNITED
WAY
All deductions fromtotal earnings
are listed.
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
UNITED
WAY
TOTAL NET PAY CHECK
NO.
HEALTH
INSURANCE
DEDUCTIONS
286.19 1,373.81 409
Deductions are totaledand subtracted from
total earnings to arriveat net pay.
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
ALLOW.
# MARITAL
STATUS
NAME
Cadrain, Sarah 4 M
EARNINGS
REGULAR OVER-
TIME
1,600.00 60.00
TOTAL
1,660.00
Guder, James 1 S 760.00 140.00 900.00
The payroll information forthe other employees
is recorded in the same manner.
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
TOTAL
EARNINGS
107,200.001,660.00
CUMULATIVE
TOTAL
TAXABLE EARNINGS
UNEMPLOYMENT
COMP.
SOCIAL
SECURITY
1,260.00
900.00 43,400.00 900.00
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
FEDERAL
INCOME TAX
78.12184.00
SOC. SEC.
TAX
MEDICARE
TAX
24.07
HEALTH
INSURANCE
UNITED
WAY
134.00 55.80 13.05 20.00
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
UNITED
WAY
TOTAL NET PAY CHECK
NO.
HEALTH
INSURANCE
DEDUCTIONS
286.19 1,373.81 409
20.00 222.85 677.15 410
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
ALLOW.
# MARITAL
STATUS
NAME
Cadrain, Sarah 4 M
EARNINGS
REGULAR OVER-
TIME
1,600.00 60.00
TOTAL
1,660.00
Guder, James 1 S 760.00 140.00 900.00
Istone, Ken 6 M 545.00 545.00
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
TOTAL
EARNINGS
107,200.001,660.00
CUMULATIVE
TOTAL
TAXABLE EARNINGS
UNEMPLOYMENT
COMP.
SOCIAL
SECURITY
1,260.00
900.00 43,400.00 900.00
545.00 27,025.00 545.00
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
FEDERAL
INCOME TAX
78.12184.00
SOC. SEC.
TAX
MEDICARE
TAX
24.07
HEALTH
INSURANCE
UNITED
WAY
134.00 55.80 13.05 20.00
1.00 33.79 7.90 10.00
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
UNITED
WAY
TOTAL NET PAY CHECK
NO.
HEALTH
INSURANCE
DEDUCTIONS
286.19 1,373.81 409
20.00 222.85 677.15 410
10.00 52.69 492.31 411
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
ALLOW.
# MARITAL
STATUS
NAME
Cadrain, Sarah 4 M
EARNINGS
REGULAR OVER-
TIME
1,600.00 60.00
TOTAL
1,660.00
Guder, James 1 S 760.00 140.00 900.00
Istone, Ken 6 M 545.00 545.00
Kuzmik, Helen 2 M 480.00 294.00 774.00
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
TOTAL
EARNINGS
107,200.001,660.00
CUMULATIVE
TOTAL
TAXABLE EARNINGS
UNEMPLOYMENT
COMP.
SOCIAL
SECURITY
1,260.00
900.00 43,400.00 900.00
545.00 27,025.00 545.00
774.00 31,000.00 774.00
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
FEDERAL
INCOME TAX
78.12184.00
SOC. SEC.
TAX
MEDICARE
TAX
24.07
HEALTH
INSURANCE
UNITED
WAY
134.00 55.80 13.05 20.00
1.00 33.79 7.90 10.00
60.00 47.99 11.22 13.00 20.00
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
UNITED
WAY
TOTAL NET PAY CHECK
NO.
HEALTH
INSURANCE
DEDUCTIONS
286.19 1,373.81 409
20.00 222.85 677.15 410
10.00 52.69 492.31 411
20.00 152.21 621.79 41213.00
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
ALLOW.
# MARITAL
STATUS
NAME
Cadrain, Sarah 4 M
EARNINGS
REGULAR OVER-
TIME
1,600.00 60.00
TOTAL
1,660.00
Guder, James 1 S 760.00 140.00 900.00
Istone, Ken 6 M 545.00 545.00
Kuzmik, Helen 2 M 480.00 294.00 774.00
Lee, Hoseoup 3 M 440.00 440.00
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
TOTAL
EARNINGS
107,200.001,660.00
CUMULATIVE
TOTAL
TAXABLE EARNINGS
UNEMPLOYMENT
COMP.
SOCIAL
SECURITY
1,260.00
900.00 43,400.00 900.00
545.00 27,025.00 545.00
774.00 31,000.00 774.00
440.00 22,340.00 440.00
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
FEDERAL
INCOME TAX
78.12184.00
SOC. SEC.
TAX
MEDICARE
TAX
24.07
HEALTH
INSURANCE
UNITED
WAY
134.00 55.80 13.05 20.00
1.00 33.79 7.90 10.00
60.00 47.99 11.22 13.00 20.00
10.00 27.28 6.38 13.00
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
UNITED
WAY
TOTAL NET PAY CHECK
NO.
HEALTH
INSURANCE
DEDUCTIONS
286.19 1,373.81 409
20.00 222.85 677.15 410
10.00 52.69 492.31 411
20.00 152.21 621.79 41213.00
13.00 56.66 383.34 413
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
ALLOW.
# MARITAL
STATUS
NAME
Cadrain, Sarah 4 M
EARNINGS
REGULAR OVER-
TIME
1,600.00 60.00
TOTAL
1,660.00
Guder, James 1 S 760.00 140.00 900.00
Istone, Ken 6 M 545.00 545.00
Kuzmik, Helen 2 M 480.00 294.00 774.00
Lee, Hoseoup 3 M 440.00 440.00
Swaney, Linda 2 S 528.00 198.00 726.00
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
TOTAL
EARNINGS
107,200.001,660.00
CUMULATIVE
TOTAL
TAXABLE EARNINGS
UNEMPLOYMENT
COMP.
SOCIAL
SECURITY
1,260.00
900.00 43,400.00 900.00
545.00 27,025.00 545.00
774.00 31,000.00 774.00
440.00 22,340.00 440.00
726.00 27,500.00 726.00
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
FEDERAL
INCOME TAX
78.12184.00
SOC. SEC.
TAX
MEDICARE
TAX
24.07
HEALTH
INSURANCE
UNITED
WAY
134.00 55.80 13.05 20.00
1.00 33.79 7.90 10.00
60.00 47.99 11.22 13.00 20.00
10.00 27.28 6.38 13.00
75.00 45.01 10.53
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
UNITED
WAY
TOTAL NET PAY CHECK
NO.
HEALTH
INSURANCE
DEDUCTIONS
286.19 1,373.81 409
20.00 222.85 677.15 410
10.00 52.69 492.31 411
20.00 152.21 621.79 41213.00
13.00 56.66 383.34 413
130.54 595.46 414
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
ALLOW.
# MARITAL
STATUS
NAME
Cadrain, Sarah 4 M
EARNINGS
REGULAR OVER-
TIME
1,600.00 60.00
TOTAL
1,660.00
Guder, James 1 S 760.00 140.00 900.00
Istone, Ken 6 M 545.00 545.00
Kuzmik, Helen 2 M 480.00 294.00 774.00
Lee, Hoseoup 3 M 440.00 440.00
Swaney, Linda 2 S 528.00 198.00 726.00
Tucci, Paul 5 M 490.00 490.00
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
TOTAL
EARNINGS
107,200.001,660.00
CUMULATIVE
TOTAL
TAXABLE EARNINGS
UNEMPLOYMENT
COMP.
SOCIAL
SECURITY
1,260.00
900.00 43,400.00 900.00
545.00 27,025.00 545.00
774.00 31,000.00 774.00
440.00 22,340.00 440.00
726.00 27,500.00 726.00
490.00 25,050.00 490.00
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
FEDERAL
INCOME TAX
78.12184.00
SOC. SEC.
TAX
MEDICARE
TAX
24.07
HEALTH
INSURANCE
UNITED
WAY
134.00 55.80 13.05 20.00
1.00 33.79 7.90 10.00
60.00 47.99 11.22 13.00 20.00
10.00 27.28 6.38 13.00
75.00 45.01 10.53
2.00 30.38 7.11 10.00
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
UNITED
WAY
TOTAL NET PAY CHECK
NO.
HEALTH
INSURANCE
DEDUCTIONS
286.19 1,373.81 409
20.00 222.85 677.15 410
10.00 52.69 492.31 411
20.00 152.21 621.79 41213.00
13.00 56.66 383.34 413
130.54 595.46 414
10.00 49.49 440.51 415
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
ALLOW.
# MARITAL
STATUS
NAME
Cadrain, Sarah 4 M
EARNINGS
REGULAR OVER-
TIME
1,600.00 60.00
TOTAL
1,660.00
Guder, James 1 S 760.00 140.00 900.00
Istone, Ken 6 M 545.00 545.00
Kuzmik, Helen 2 M 480.00 294.00 774.00
Lee, Hoseoup 3 M 440.00 440.00
Swaney, Linda 2 S 528.00 198.00 726.00
Tucci, Paul 5 M 490.00 490.00
Wiles, Harry 1 S 300.00 300.00
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
TOTAL
EARNINGS
107,200.001,660.00
CUMULATIVE
TOTAL
TAXABLE EARNINGS
UNEMPLOYMENT
COMP.
SOCIAL
SECURITY
1,260.00
900.00 43,400.00 900.00
545.00 27,025.00 545.00
774.00 31,000.00 774.00
440.00 22,340.00 440.00
726.00 27,500.00 726.00
490.00 25,050.00 490.00
300.00 6,300.00 300.00 300.00
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
FEDERAL
INCOME TAX
78.12184.00
SOC. SEC.
TAX
MEDICARE
TAX
24.07
HEALTH
INSURANCE
UNITED
WAY
134.00 55.80 13.05 20.00
1.00 33.79 7.90 10.00
60.00 47.99 11.22 13.00 20.00
10.00 27.28 6.38 13.00
75.00 45.01 10.53
2.00 30.38 7.11 10.00
22.00 18.60 4.35
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
UNITED
WAY
TOTAL NET PAY CHECK
NO.
HEALTH
INSURANCE
DEDUCTIONS
286.19 1,373.81 409
20.00 222.85 677.15 410
10.00 52.69 492.31 411
20.00 152.21 621.79 41213.00
13.00 56.66 383.34 413
130.54 595.46 414
10.00 49.49 440.51 415
44.95 255.05 416
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
ALLOW.
# MARITAL
STATUS
NAME
Cadrain, Sarah 4 M
EARNINGS
REGULAR OVER-
TIME
1,600.00 60.00
TOTAL
1,660.00
Guder, James 1 S 760.00 140.00 900.00
Istone, Ken 6 M 545.00 545.00
Kuzmik, Helen 2 M 480.00 294.00 774.00
Lee, Hoseoup 3 M 440.00 440.00
Swaney, Linda 2 S 528.00 198.00 726.00
Tucci, Paul 5 M 490.00 490.00
Wiles, Harry 1 S 300.00 300.00
5,143.00 692.00 5,835.00
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
TOTAL
EARNINGS
107,200.001,660.00
CUMULATIVE
TOTAL
TAXABLE EARNINGS
UNEMPLOYMENT
COMP.
SOCIAL
SECURITY
1,260.00
900.00 43,400.00 900.00
545.00 27,025.00 545.00
774.00 31,000.00 774.00
440.00 22,340.00 440.00
726.00 27,500.00 726.00
490.00 25,050.00 490.00
300.00 6,300.00 300.00 300.00
5,835.00 289,815.00 300.00 5,435.00
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
FEDERAL
INCOME TAX
78.12184.00
SOC. SEC.
TAX
MEDICARE
TAX
24.07
HEALTH
INSURANCE
UNITED
WAY
134.00 55.80 13.05 20.00
1.00 33.79 7.90 10.00
60.00 47.99 11.22 13.00 20.00
10.00 27.28 6.38 13.00
75.00 45.01 10.53
2.00 30.38 7.11 10.00
22.00 18.60 4.35
488.00 336.97 84.61 46.00 40.00
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
UNITED
WAY
TOTAL NET PAY CHECK
NO.
HEALTH
INSURANCE
DEDUCTIONS
286.19 1,373.81 409
20.00 222.85 677.15 410
10.00 52.69 492.31 411
20.00 152.21 621.79 41213.00
13.00 56.66 383.34 413
130.54 595.46 414
10.00 49.49 440.51 415
44.95 255.05 416
46.00 40.00 995.58 4,839.42
• Employees may be paid in cash or by
check
– The employer furnishes an earnings
statement to each employee along with
his or her paycheck
• In many cases, payment is made by direct
deposit or electronic funds transfer (EFT)
by the employer to the employee’s bank
– Payment by check or direct deposit
provides better internal accounting
control than payment by cash
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
REGULAR OVERTIMEPERIOD
ENDED
EARNINGS
TOTAL CUMULATIVE
TOTAL
GENDER DEPARTMENT OCCUPATION SOCIAL SECURITY #
M F
Maintenance Service 393-58-8194
12/5
12/12
11/28 545.00
545.00
545.00
75.00
75.00
75.00
620.00
620.00
620.00
25,240.00
25,860.00
26,480.00A separate earnings recordis maintained for each employee.
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
REGULAR OVERTIMEPERIOD
ENDED
EARNINGS
TOTAL CUMULATIVE
TOTAL
GENDER DEPARTMENT OCCUPATION SOCIAL SECURITY #
M F
Maintenance Service 393-58-8194
12/5
12/12
11/28 545.00
545.00
545.00
75.00
75.00
75.00
620.00
620.00
620.00
25,240.00
25,860.00
26,480.00
Let’s record the last entryof the year for Ken Istone.
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
REGULAR OVERTIMEPERIOD
ENDED
EARNINGS
TOTAL CUMULATIVE
TOTAL
GENDER DEPARTMENT OCCUPATION SOCIAL SECURITY #
M F
Maintenance Service 393-58-8194
12/5
12/12
11/28 545.00
545.00
545.00
75.00
75.00
75.00
620.00
620.00
620.00
25,240.00
25,860.00
26,480.00
12/19 545.00 545.00 27,025.00
Earnings for this periodare recorded and the cumulative
earnings are updated.
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
UNEMPLOYMENT
COMPENSATION
SOCIAL
SECURITY
TAXABLE EARNINGS
FEDERAL
INCOME TAX
SOCIAL
SECURITY TAX
MARITAL STATUS ALLOWANCES PAY RATE
DEDUCTIONS
M $545/week
620.00
620.00
620.00
9.00
9.00
9.00
38.44
38.44
38.44
545.00 1.00 33.79
Deductions are noted.
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
MEDICARE
TAX
HEALTH
INSURANCE
UNITED
WAY
OTHER
DATE OF BIRTH DATE HIRED NAME/ADDRESS
DEDUCTIONS
8/17/64 1/3/87
Ken M. Istone
1546 Swallow Drive
St. Louis, MO 63144-4752
8.99
8.99
8.99
10.00
10.00
10.00
7.90 10.00
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
OTHER TOTAL CHECK
#
AMOUNT
NAME/ADDRESS EMPLOYEE NUMBER
DEDUCTIONS
Ken M. Istone
1546 Swallow Drive
St. Louis, MO 63144-4752
3
66.43
66.43
66.43
387
395
403
547.57
547.57
547.57
52.69 411 492.31
Deductions are totaled andnet pay is recorded, along
with the paycheck’s number.
4
Account for employee
earnings and deductions.
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
DATE DESCRIPTION PR DEBIT CREDIT
1
2
3
4
5
6
7
8
9
10
11
Journal entries are now made to recordthe payroll expenses and liabilities.
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
DATE DESCRIPTION PR DEBIT CREDIT
1
2
3
4
5
6
7
8
9
10
11
The payroll register is the source for the journal entry.
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
DATE DESCRIPTION PR DEBIT CREDIT
1
2
3
4
5
6
7
8
9
10
11
Dec. 19 Wages and Salaries Expense 5,835.00
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
DATE DESCRIPTION PR DEBIT CREDIT
1
2
3
4
5
6
7
8
9
10
11
Dec. 19 Wages and Salaries Expense 5,835.00
Employee Income Tax Pay.
Social Security Tax Payable
Medicare Tax Payable
Health Ins. Prem. Payable
United Way Contrib. Pay.
488.00
336.97
84.61
46.00
40.00
Each deduction is recordedin a separate liability account.
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
DATE DESCRIPTION PR DEBIT CREDIT
1
2
3
4
5
6
7
8
9
10
11
Dec. 19 Wages and Salaries Expense 5,835.00
Employee Income Tax Pay.
Social Security Tax Payable
Medicare Tax Payable
Health Ins. Prem. Payable
United Way Contrib. Pay.
Cash
488.00
336.97
84.61
46.00
40.00
4,839.42
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
WAGES AND SALARIES
EXPENSE
DEBIT CREDIT
Debit gross pay of employees for each
pay period.
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
EMPLOYEE INCOME TAX
PAYABLE
DEBIT CREDIT
Credited when federalincome tax is withheld
from employees.
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
EMPLOYEE INCOME TAX
PAYABLEDEBIT CREDIT
Debited when withheld taxes are paid to
the IRS.
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
SOCIAL SECURITY
TAX PAYABLE
DEBIT CREDIT
Both the employer and employeepay Social Security taxes.
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
SOCIAL SECURITY
TAX PAYABLE
DEBIT CREDIT
Credited when taxesare withheld from
employees’ earnings.
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
SOCIAL SECURITY
TAX PAYABLE
DEBIT CREDIT
Also credited for taxesimposed on the
employer.
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
SOCIAL SECURITY
TAX PAYABLE
DEBIT CREDIT
Debited when taxesare paid.
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
MEDICARE TAX
PAYABLE
DEBIT CREDIT
WORKS EXACTLY THE SAME AS SOCIAL SECURITY TAX PAYABLE
5
Describe various
payroll record-keeping
methods.
• Manual system:
– The same information is recorded several
times
– Can be very inefficient
• Payroll processing center:
– A business that sells payroll record-keeping
services
• Electronic system:
– A computer system that performs all payroll
record keeping and prepares payroll checks
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
INPUT PROCESSING OUTPUT
EMPLOYEE:
SOCIAL
SECURITY #
HOURS
WORKED
Only the employee’s social security number
and hours worked are input each
pay period.
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
INPUT PROCESSING OUTPUT
EMPLOYEE:
SOCIAL
SECURITY #
HOURS
WORKED
COMPUTER
Payroll
Register
Paychecks
Employee
Earnings
Record
