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LESSON 12-1

LESSON 12-1. Preparing Payroll Time Cards Did you know… Payroll is one of the largest expenses to a business?. New Vocabulary. Salary: The money paid for employee services Pay period: The period covered by a salary payment

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LESSON 12-1

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  1. LESSON 12-1 Preparing Payroll Time Cards Did you know… Payroll is one of the largest expenses to a business?

  2. New Vocabulary • Salary: The money paid for employee services • Pay period: The period covered by a salary payment • Payroll: The total amount earned by all employees for a pay period 12-1

  3. ANALYZING A PAYROLL TIME CARD page 341 3 main sections: Morning, Afternoon and Overtime 12-1

  4. 1 2 3 4 CALCULATING EMPLOYEE HOURS WORKED page 342 1. 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. 12-1

  5. 1 2 4 3 5 CALCULATING EMPLOYEE TOTAL EARNINGS page 343 1. 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. 12-1

  6. Audit Your Understanding What is a payroll? • The total amount earned by all employees for a period. AKA Salary Expense How many hours were worked by a Hobby Shack employee who arrived at 8:12 and departed 12:02? • 3.75 hours 12-1

  7. Audit Your Understanding How does Hobby Shack calculate overtime earnings? • Overtime hours x overtime rate What are the total earnings of a Hobby Shack employee who worked 44 hours in a week and earns $10 per hour? • $460 (40 x $10.00 + 4 x $15.00) 12-1

  8. Work Together • In book 12-1

  9. 12-2 Determining Payroll Tax WithholdingNew Vocabulary • Payroll taxes: Taxes based on the payroll of a business • Withholding allowance: A deduction from full earnings for each person legally supported by a taxpayer, including the employee • Social Security tax: A federal tax paid for old-age, survivors, and disability insurance • Medicare tax: A federal tax paid for hospital insurance • Tax base: The maximum amount of earnings on which a tax is calculated (Tax base for this textbook: $87,000.00, Actual 2004 tax base set by Congress: $87,900.00. UPDATE: In 2009 it was moved up to $106,500.00) 12-1

  10. EMPLOYEE’S WITHHOLDING ALLOWANCE CERTIFICATE page 346 3 2 1 4 5 12-1

  11. 2 3 EMPLOYEE’S INCOME TAX WITHHOLDING – MARRIED PERSONS page 348 1 1. Select the appropriate table. 2. Locate the employee’s total earnings. 3. Intersection of wages and number of allowances 12-1

  12. Audit Your Understanding Where does the employer get the information used to determine the amount of federal income tax to withhold from employees’ earning? • Form W-4, Employee’s Withholding Allowance Certificate Employee federal income tax withholdings are based on what two factors? • Employee marital status and number of withholding allowances Does the employer or employee pay Social Security tax and Medicare tax? • Both the employee and the employer 12-1

  13. Work Together • In book 12-1

  14. 12-3 Preparing Payroll Records New Vocabulary • Payroll register: A business form used to record payroll information • Employee earnings record: A business form used record details affecting payments made to an employee 12-1

  15. page 351 PAYROLL REGISTER 1 2 11 4 5 6 7 8 9 10 3 13 12 12-1

  16. 4 5 2 EMPLOYEE EARNINGS RECORDS page 353 1. Last day of quarter 2. Employee personal data 3. Beginning accumulated earnings 1 4. Pay period 3 5. Earnings, deductions, net pay 6. Updated accumulated earnings 6 7 7. Total and prove 12-1

  17. Audit Your Understanding What does the payroll register summarize? • It summarizes the payroll for one pay period, and shows total earnings, payroll withholdings, and net pay for all employees How is net pay calculated? • By subtracting total deductions from total earnings Why do companies complete employee earning records? • Because a business must send a quarterly report to federal and state governments showing employee taxable earnings and taxes withheld from employee earnings. 12-1

  18. Work Together • In book 12-1

  19. Most companies pay their employees with checks written on a special payroll checking account. A check for the total net pay is written on the general checking account to the payroll checking account. LESSON 12-4Preparing Payroll Checks 12-1

  20. PAYROLL BANK ACCOUNT page 356 1 2 1. Prepare the check stub. 2. Prepare the check. 12-1

  21. EMPLOYEE’S PAYROLL CHECK page 357 1 2 1. Prepare the check stub of each employee’s payroll check. 2. Prepare each employee’s payroll check. 12-1

  22. Audit Your Understanding Why does Hobby Shack have a separate checking account for payroll checks? • To help protect and control payroll payments What is the source of the information that is recorded on each employee’s payroll check stub? • The payroll register 12-1

  23. Work Together • In book • Julian Beever’s Sidewalk Art 12-1

  24. The End 12-1

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