Chapter 12. Objectives:

Transcription

1 Chapter 12 Objectives: 1. Define accounting terms related to payroll records 2. Identify accounting practices related to payroll records 3. Complete a payroll time card 4. Calculate payroll taxes 5. Complete a payroll register and an employee earnings record 6. Prepare payroll checks

2 LESSON Preparing Payroll Time Cards Salary money paid for employee services Pay period period covered by a salary payment A business may decide to pay employee salaries every week, every two weeks, twice a month, or once a month How may pays would an employee receive in a year if he/she were paid Weekly 52 Biweekly (every two weeks) 26 Semimonthly (twice a month) 24 Monthly 12 Payroll total amount earned by all employees for a pay period Employees can be paid based on hours worked (wages), a fixed amount each pay (salary), commissions Time cards used to record how much time an employee worked

3 3 ANALYZING A PAYROLL TIME CARD page 341 LESSON 12-1

4 CALCULATING EMPLOYEE HOURS WORKED page Calculate the number of regular hours for each day and enter the amounts. 2. Calculate the number of overtime hours and enter the amounts. 3. Add Hours Reg and Hours OT columns and enter the totals. 4. Add the Hours column. 4 3 LESSON 12-1

5 CALCULATING EMPLOYEE TOTAL EARNINGS page Enter the rate for regular time in the Rate column. 2. Calculate the regular earnings. Enter the amount. 3. Enter the rate for overtime. 4. Calculate the overtime earnings. Enter the amount. 5. Add the Amount column to calculate total earnings. Enter the amount of total earnings LESSON 12-1

6 6 Calculating Employee Total Earnings Regular hours x Regular rate = Regular Earnings 88 x = 1, Regular rate x Overtime rate = Overtime Rate x 1.5 = Overtime hours x 1.5 = Overtime Earnings 4.5 x = Regular Earnings + Overtime Earnings = Total Earnings 1, = 1,137 Total Earnings the total pay due for a pay period before deductions (gross pay or gross earnings) This will be reduced by state and federal taxes and other deductions, such as health insurance LESSON 12-1

7 7 TERMS REVIEW page 344 salary pay period payroll total earnings LESSON 12-1

8 LESSON Determining Payroll Tax Withholding Payroll taxes taxes based on the payroll of a business Employers are required to withhold federal income taxes, along with other taxes (state, city, or county) Payroll taxes represent a liability for the employer until they are paid Accurate and detailed payroll records must be maintained in order to avoid errors and penalties Form W-4 contains the information used to determine the amount of income tax withheld Withholding allowance deduction from total earnings for each person legally supported by a taxpayer Amount withheld is based on employee marital status, # of withholding allowances, and employee earnings Tables are provided by IRS to determine income tax amount

9 EMPLOYEE S WITHHOLDING ALLOWANCE CERTIFICATE 9 page Write the employee s name and address 2. Write the employee s social security number. 3. Check the appropriate marital status block. 4. Write the total number of withholding allowances claimed. 5. The employee signs and dates the form. LESSON 12-2

10 EMPLOYEE S INCOME TAX WITHHOLDING MARRIED PERSONS page Select the appropriate table. 2. Locate the employee s total earnings. 3. Intersection of wages and number of allowances column. LESSON 12-2

11 11 Determining Payroll Tax Withholding FICA Federal Insurance Contributions Act provides for a federal system of old-age, survivors, disability and hospital insurance Social security tax a federal tax paid for old-age, survivors, and disability insurance Medicare tax a federal tax paid for hospital insurance Both the employer AND employee pay Social Security and Medicare taxes Tax base maximum amount of earning on which a tax is calculated No more Social Security tax is deducted once an employee s earnings reach the base; Social Security tax rate and base are set by Congress and can change at any time Medicare does NOT have a tax base LESSON 12-1

12 12 Determining Payroll Tax Withholding For this text Social Security tax rate 6.2% Base = $87,000 Medicare 1.45% with no base Example, page 349 Total Earnings x Social Security Tax Rate = Social Security Tax Deduction 1, x 6.2% = Total Earnings x Medicare Tax Rate = Medicare Tax Deduction 1, x 1.45% = LESSON 12-1

13 13 TERMS REVIEW page 350 payroll taxes withholding allowance social security tax Medicare tax tax base LESSON 12-2

14 LESSON Preparing Payroll Records Payroll register - A business form used to record payroll information Shows total earnings, payroll withholdings, and net pay of all employees for the pay period Net pay total amount paid to employees after payroll taxes and other deductions have been deducted Voluntary deductions deductions from employee earnings that are not required by the government Health insurance, US Savings Bonds, United Way Donations, Retirement Plans, etc. Employee Earnings Record a business form used to record details affecting payments made to an employee

15 15 PAYROLL REGISTER page Pay period date 2. Payment date 3. Employee personal data 4. Earnings 5. Federal income tax withheld 6. Social security tax withheld 7. Medicare tax withheld Health insurance premium deductions 9. Other employee payroll deductions 10. Total deductions 11. Net pay 12. Total, prove, and rule 13. Check number LESSON 12-3

16 16 EMPLOYEE EARNINGS RECORDS page Last day of quarter 2. Employee personal data 3. Beginning accumulated earnings 4. Pay period 5. Earnings, deductions, net pay 6. Updated accumulated earnings Total and prove LESSON 12-3

17 17 TERMS REVIEW page 355 payroll register net pay employee earnings record LESSON 12-3

18 LESSON Preparing Payroll Checks Check is written out of the general checking account for the total of the net pay to cover payroll Check is then deposited in the Payroll Checking Account Special checking account for payroll is kept which helps to protect and control payroll payments Payroll checks have a detachable stub to supply information about the earnings and amounts deducted Information on stub comes from the payroll register

19 19 PAYROLL BANK ACCOUNT page Prepare the check stub. 2. Prepare the check. LESSON 12-4

20 20 EMPLOYEE S PAYROLL CHECK page Prepare the check stub of each employee s payroll check. 2. Prepare each employee s payroll check. LESSON 12-4