Preparing Payroll Records
Salary The money paid for employee services. Pay Period The period covered by a salary payment. Semimonthly Pay Period Paid twice a month, 15 th and 30 th. Payroll The total amount earned by all employees for a pay period.
Overtime Work over 8 hours per day. 1 ½ times the normal rate of pay Total Earnings The total pay due for a pay period before deductions.
Time Cards Used as a basic source of information to prepare payroll.
1 1. Calculate regular hours. 2. Calculate overtime hours. 3. Add Hours Reg and Hours OT columns and enter totals. 4. Add Hours column. 2 3 4
Regular Hours Regular Rate = Regular Earnings 80 $7.00 per hour = $560.00 Overtime Hours Regular Rate 1.5 5 $7.00 1.5 = Overtime Earnings = $52.50 Regular Earnings Overtime + = Earnings Total Earnings $560.00 + $52.50 = $612.50
1. Enter the rate for regular time. 2. Calculate regular earnings. 3. Enter the rate for overtime. 4. Calculate overtime earnings. 5. Calculate total earnings. 1 2 3 4 5
p. 315 Audit Your Understanding p. 315 (p. 283) Work Together p. 315 (p. 284) On Your Own p. 331 (p. 291) Application Problem 13-1
Determining Payroll Tax Withholdings
Payroll Taxes Taxes based on the payroll of a business. Federal Income Taxes State Income Taxes Social Security Taxes Medicare Taxes
Form W-4: Employee s Withholding Allowance Information used to determine the amount of income tax withheld. Marital Status Number of Withholding Allowances Withholding Allowance A deduction from total earnings for each person legally supported by a taxpayer, including the employee. The larger the number of withholding allowances claimed, the smaller the amount of income taxes withheld.
1 3 2 4 5 1. Name and Address 4. Withholding Allowances 2. Social Security Number 5. Signature and Date 3. Marital Status
1. Locate the range containing the total earnings. 2. Find the column with the correct number of withholding allowances. 3. Find the intersection of the row and column.
Federal Insurance Contributions Act (FICA) 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. 6.5% of earnings Medicare Tax A federal tax paid for hospital insurance. 1.5% of earnings
Social Security and Medicare taxes are paid by both the employees and employer. Employers are required to withhold and deposit employees part of the taxes and pay a matching amount of these taxes. Tax Base The maximum amount of earnings on which a tax is calculated.
Calculate Social Security Tax Deduction Total Social Security Social Security Earnings Tax Rate = Tax Deduction $1,137.00 6.5% = $73.91 Calculate Medicare Tax Deduction Total Medicare Medicare Earnings Tax Rate = Tax Deduction $1,137.00 1.5% = $17.06
p. 321 Audit Your Understanding p. 321 (p. 285) Work Together p. 321 (p. 286) On Your Own p. 331 (p. 293) Application Problem 13-2
Preparing Payroll Records
Payroll Register A business form used to record payroll information. Net Pay The total earnings paid to an employee after taxes and other deductions. Employee Earnings Record A business form used to record details affecting payments made to an employee.
1 2 4 5 6 7 8 9 10 11 13 3 12 1. Pay Period Date 2. Payment Date 3. Employee Personal Data 4. Earnings 5. Federal Income Tax 6. Social Security Tax 7. Medicare Tax 8. Health Insurance 9. Other Deductions 10. Total Deductions 11. Net Pay 12. Total, Prove, and Rule 13. Check Number
5. Earnings, Deductions, Net Pay 2. Employee Personal Data 2 5 1. Last day of 1 Quarter 3. Beginning Accumulated Earnings 3 4. Pay 4 Period 6 7 6. Updated Accumulated Earnings 7. Total and Prove
p. 326 Audit Your Understanding p. 326 (p. 287) Work Together p. 326 (p. 288) On Your Own p. 331 (p. 295, 297) Application Problem 13-3, 13-4
Preparing Payroll Checks
Payroll checks are written on a special payroll checking account. A check for the total net pay is written on the general checking account and deposited in the payroll checking account. Electronic Funds Transfer (EFT) A computerized cash payments system that uses electronic impulses to transfer funds. Direct Deposit
1 2 1. Prepare the check stub. 2. Prepare the check.
1 2 1. Enter on check stub information from payroll register. 2. Prepare employee s payroll check for net amount of earnings.
p. 329 Audit Your Understanding p. 329 (p. 289) Work Together p. 329 (p. 290) On Your Own p. 332 (p. 299) Application Problem 13-5 p. 333 (p. 301) Mastery Problem 13-6