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Chapter 9

Chapter 9. Payroll. #9. Payroll. Learning Unit Objectives. Calculating Various Types of Employees’ Gross Pay. LU9.1. Define, compare, and contrast weekly, biweekly, semimonthly, and monthly pay periods Calculate gross pay with overtime on the basis of time

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Chapter 9

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  1. Chapter 9 Payroll

  2. #9 Payroll Learning Unit Objectives Calculating Various Types of Employees’ Gross Pay LU9.1 • Define, compare, and contrast weekly, biweekly, semimonthly, and monthly pay periods • Calculate gross pay with overtime on the basis of time • Calculate gross pay for piecework, differential pay schedule, straight commission, variable commission scale and salary plus commission

  3. #9 Payroll Learning Unit Objectives Computing Payroll Deductions for Employees’ Pay; Employers’ Responsibilities LU9.2 • Prepare and explain the parts of a payroll register • Explain and calculate federal and state unemployment taxes

  4. Payroll Cycles

  5. Hourly Rate of Pay; Calculation of Overtime Gross pay = Hours Employee worked x Rate per hour Hourly overtime pay rate = Regular hourly pay rate x 1.5 Gross pay = Earnings for 40 hours + Earnings at time-and-a-half rate

  6. Hourly Rate of Pay; Calculation of Overtime Employee M T W Th F S Total R Valdez 13 8.5 10 8 11.25 10.75 61.5 Hourly overtime pay rate = Regular hourly pay rate x 1.5 Gross pay = Earnings for 40 hours + Earnings at time-and-a-half rate 61.5 – 40 = 21.5 overtime hours $9 x 1.5 = 13.50 overtime rate (40 hours x $9) + (21.5 hours x 13.5) $360 + $290.25 = $650.25

  7. Straight Piece Rate Pay Straight Piece Rate Pay Gross pay = Number of units produced x Rate per unit Rob produced 900 dolls. He is paid $.96 per doll. Calculate his gross pay 900 x $.96 = $864

  8. Differential Pay Schedule Differential Pay Schedule Gross pay = Number of units produced x Various rates per unit Units Amount produced per unit 1-50 $ .50 51-150 .62 151-200 .75 Over 200 1.25 (50 x $.50) +(100 x $.62)+(50 x $.75) + (100 x $1.25) = $249.50

  9. Straight Commission with Draw Larry is paid a straight commission of 15%. His computer net sales were $56,000. Larry’s draw was $600. What is his gross pay? Commission is a certain percentage of the amount a salesperson sells. Draw is an advance on the salesperson’s commission ($560,000 x .15) = $8,400 -600 $7,800

  10. Variable Commission Scale Different commission rates for different levels of net sales Up to $35,000 4% Excess of $35,000 to $45,000 6% Over $45,000 8% Juanita’s net sales were $160,000. What is her gross pay based on the schedule? ($35,000 x .04) + ($10,000 x .06) + ($115,000 x .08) = $11,200

  11. Salary Plus Commission Gross Pay = Salary + Commission Chung receives a salary of $3,000 per month. He also receives a 4% commission for sales over $20,000. Last month’s sales were $50,000. Calculate Chung’s gross pay. $3,000 + ($30,000 x .04) = $4,200

  12. Payroll Register Rate Base Social Security 6.20% $97,500 Medicare 1.45 No Base

  13. Federal Income Tax Withholding (FIT) 1. Percentage Method

  14. Table 9-3,9-4 Percentage method income tax withholding tables One Withholding Payroll Period Allowance Weekly $ 65.38 Bi weekly 130.77 Semimonthly 141.67 Monthly 283.33 Quarterly 850.00 SemiAnnually 1700.00 Daily or miscellaneous (each 13.08 day of the payroll period) Partial (b) MARRIED person - if the amount of wages (after subtracting The amount of income tax withholding allowances) is: to withhold is: Not over $154 $0 Over -- But not over -- of excess over -- $154 $449 10% $154 $449 $1,360 $29.50 plus 15% $449 $1,360 $2,573 $166.15 plus 25% $1,360 $2,573 $3,907 $469.40 plus 28% $2,573 $3,907 $6,865 $842.92 plus 33% $3,907 $6,865…… $1819.06 plus 35% $6,865

  15. Percentage Method 1) Locate one withholding allowance and multiply by the number of allowances employee claims $65.38 x 2 = $130.76 $2,250.00 - 130.76 $2,119.24 2) Subtract step 1 from employees pay $2,119.24 -1,360.00 $ 759.24 Tax $166.15 + .25 ($759.24) $166.15 + 189.81 = $355.96 3) In table 9.2 locate appropriate table and compute income tax

  16. Employers’ Responsibilities Federal Unemployment Tax Act (FUTA)- 6.2% tax on the first $7,000 paid to employees as wages during the calendar year *State Unemployment Tax Act (SUTA)- 5.4% tax on the first $7,000 paid to employees as wages during the calendar year *Can be credited against the 6.2% federal rate. 6.2% FUTA 5.4% SUTA credit .8% FUTA tax Employee earns $9,000 in the first quarter. How much does the employer pay in FUTA & SUTA? SUTA = $7,000 x .054 = $378, FUTA = $7,000 x .008 = $56

  17. Problem 9-24: Solution: $40,000 x .03 = $1,200 45,000 x .04 = 1,800 2,000 x .06 = 120 $3,120

  18. Problem 9-26: Solution: Social Security: $2,100 x .062 = $130.20 Medicare: $2,100 x .0145 = $30.45 Yes for Social Security: 52 weeks x $2,100 = $109,200 - 97,500 $ 11,700 exempt

  19. Problem 9-27: Solution: Social Security: $1,000 x .062 = $62 Medicare: $1,300 x .0145 = $30.45 FIT: $1,300.00 - 130.76 ($65.38 x 2) $1,169.24 - 449.00 $29.50 + .15 ($720.24) $ 720.24 $29.50 + $108.04 = $137.54

  20. Problem 9-30: Solution: State: $16,900 x .056 = $946.40 Federal: $16,900 x .008 = $135.20 $0 for week 30 11 x $400 = $ 4,400 11 x $500 = 5,500 11 x $700 = 7,700 17,600 - 700 $16,900

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