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Payroll Computations, Records, and Payment

Chapter. 10. Payroll Computations, Records, and Payment. Section 2: Calculating Earnings and Taxes. Section Objectives. Compute gross earnings of employees. Determine employee deductions for social security tax. Determine employee deductions for Medicare tax.

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Payroll Computations, Records, and Payment

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  1. Chapter 10 Payroll Computations, Records, and Payment Section 2: Calculating Earnings and Taxes Section Objectives • Compute gross earnings of employees. • Determine employee deductions for social security tax. • Determine employee deductions for Medicare tax. • Determine employee deductions for income tax. • Enter gross earnings, deductions, and net pay in the payroll register.

  2. Recording Payroll Information for Employees

  3. Objective 6 Enter gross earnings, deductions, and net pay in the payroll register.

  4. QUESTION: What is a payroll register? ANSWER: A payroll register is a record of payroll information for each employee for the pay period.

  5. PAYROLL REGISTER WEEK BEGINNING January 1, 20-- NAME NO. OF MARITAL CUMULATIVE NO. OF RATE ALLOW. STATUS EARNINGS HRS. Martinez, Alicia 1 M 40 10.00 Rodriguez, Jorge 1 S 40 9.50 Dunlap, George 3 S 45 9.00 Wu, Cecil 2 M 40 14.00 Booker, Cynthia 1 S 40 480.00 (A) (B) (C) (D) (E) Completing the Payroll Register Enter the employee’s name (Column A), number of withholding allowances and marital status (Column B), and rate of pay (Column E).

  6. PAYROLL REGISTER WEEK BEGINNING January 1, 20-- NAME NO. OF MARITAL CUMULATIVE NO. OF RATE ALLOW. STATUS EARNINGS HRS. Martinez, Alicia 1 M 40 10.00 Rodriguez, Jorge 1 S 40 9.50 Dunlap, George 3 S 45 9.00 Wu, Cecil 2 M 40 14.00 Booker, Cynthia 1 S 40 480.00 (A) (B) (C) (D) (E) Completing the Payroll Register The Cumulative Earnings column (Column C) shows the total earnings for the calendar year before the current pay period. Since this is the first payroll period for the year, there are no cumulative earnings prior to the current pay period.

  7. PAYROLL REGISTER WEEK BEGINNING January 1, 20-- NAME NO. OF MARITAL CUMULATIVE NO. OF RATE ALLOW. STATUS EARNINGS HRS. Martinez, Alicia 1 M 40 10.00 Rodriguez, Jorge 1 S 40 9.50 Dunlap, George 3 S 45 9.00 Wu, Cecil 2 M 40 14.00 Booker, Cynthia 1 S 40 480.00 (A) (B) (C) (D) (E) Completing the Payroll Register In Column D enter the total number of hours worked in the current period. This data comes from the weekly time sheets. Note that all employees were paid for eight hours on January 1, a holiday.

  8. PAYROLL REGISTER WEEK BEGINNING January 1, 20-- EARNINGS NAME REGULAR OVERTIME GROSS CUMULATIVE PREMIUM AMOUNT EARNINGS Martinez, Alicia 400.00 400.00 400.00 Rodriguez, Jorge 380.00 380.00 380.00 Dunlap, George 360.00 67.50 427.50 427.50 Wu, Cecil 560.00 560.00 560.00 Booker, Cynthia 480.00 480.00 480.00 2,180.00 67.50 2,247.50 2,247.50 (A) (F) (G) (H) (I) Completing the Payroll Register Using the hours worked and the pay rate, calculate regular pay (Column F), the overtime premium (Column G), and gross pay (Column H).

  9. PAYROLL REGISTER WEEK BEGINNING January 1, 20-- EARNINGS NAME REGULAR OVERTIME GROSS CUMULATIVE PREMIUM AMOUNT EARNINGS Martinez, Alicia 400.00 400.00 400.00 Rodriguez, Jorge 380.00 380.00 380.00 Dunlap, George 360.00 67.50 427.50 427.50 Wu, Cecil 560.00 560.00 560.00 Booker, Cynthia 480.00 480.00 480.00 2,180.00 67.50 2,247.50 2,247.50 (A) (F) (G) (H) (I) Completing the Payroll Register Calculate the cumulative earnings after this pay period (Column I).

  10. AND ENDING January 6, 20-- PAID January 8, 20-- TAXABLE WAGES DEDUCTIONS NAME SOCIAL MEDICARE FUTA SOCIAL MEDICARE SECURITY SECURITY Martinez, Alicia 400.00 400.00 400.00 24.80 5.80 Rodriguez, Jorge 380.00 380.00 380.00 23.56 5.51 Dunlap, George 427.50 427.50 427.50 26.51 6.19 Wu, Cecil 560.00 560.00 560.00 34.72 8.12 Booker, Cynthia 480.00 480.00 480.00 29.76 6.96 2,247.50 2,247.50 2,247.50 139.35 32.58 (A) (J) (K) (L) (M) (N) Completing the Payroll Register The Taxable Wages columns shows the earnings subject to taxes for social security (Column J), Medicare (Column K), and FUTA (Column L). Only the earnings at or under the earnings limit are included in these columns.

  11. AND ENDING January 6, 20-- PAID January 8, 20-- DEDUCTIONS NAME SOCIAL MEDICARE INCOME HEALTH SECURITY TAX INSURANCE Martinez, Alicia 24.80 5.80 19.00 Rodriguez, Jorge 23.56 5.50 34.00 Dunlap, George26.51 6.19 23.00 40.00 Wu, Cecil 34.72 8.12 30.00 40.00 Booker, Cynthia 29.76 6.96 49.00 139.35 32.58 155.00 80.00 (A) (M) (N) (O) (P) Completing the Payroll Register The Deductions columns show the withholding for social security tax (Column M), Medicare tax (Column N), federal income tax (Column O), and medical insurance (Column P).

  12. AND ENDING January 6, 20-- PAID January 8, 20-- DEDUCTIONS DISTRIBUTION NAME INCOME HEALTH NET CHECK OFFICE SHIPPING TAX INSURANCE AMOUNT NO. SALARIES WAGES Martinez, Alicia 19.00 350.40 1601 400.00 Rodriguez, Jorge 34.00 316.93 1602 380.00 Dunlap, George 23.0040.00 331.80 1603 427.50 Wu, Cecil 30.00 40.00 447.16 1604 560.00 Booker, Cynthia 49.00 394.28 1605 480.00 155.00 80.00 1,840.57 480.00 1,767.50 (A) (O) (P) (Q) (R) (S) (T) Completing the Payroll Register Subtract the deductions (Columns M, N, O, and P) from the gross earnings (Column H). Enter the results in the Net Amount column (Column Q). This is the amount paid to each employee.

  13. AND ENDING January 6, 20-- PAID January 8, 20-- DEDUCTIONS DISTRIBUTION NAME INCOME HEALTH NET CHECK OFFICE SHIPPING TAX INSURANCE AMOUNT NO. SALARIES WAGES Martinez, Alicia 19.00 350.40 1601 400.00 Rodriguez, Jorge 34.00 316.93 1602 380.00 Dunlap, George 23.0040.00 331.80 1603 427.50 Wu, Cecil 30.00 40.00 447.16 1604 560.00 Booker, Cynthia 49.00 394.28 1605 480.00 155.00 80.00 1,840.57 480.00 1,767.50 (A) (O) (P) (Q) (R) (S) (T) Completing the Payroll Register Enter the check number in Column R.

  14. AND ENDING January 6, 20-- PAID January 8, 20-- DEDUCTIONS DISTRIBUTION NAME INCOME HEALTH NET CHECK OFFICE SHIPPING TAX INSURANCE AMOUNT NO. SALARIES WAGES Martinez, Alicia 19.00 350.40 1601 400.00 Rodriguez, Jorge 34.00 316.93 1602 380.00 Dunlap, George 23.0040.00 331.80 1603 427.50 Wu, Cecil 30.00 40.00 447.16 1604 560.00 Booker, Cynthia 49.00 394.28 1605 480.00 155.00 80.00 1,840.57 480.00 1,767.50 (A) (O) (P) (Q) (R) (S) (T) Completing the Payroll Register The payroll register’s last two columns classify employee earnings as office salaries (Column S) or shipping wages (Column T).

  15. The Payroll Register When the payroll data for all employees has been entered in the payroll register, total the columns.

  16. R E V I E W SECTION Complete the following sentences: The two pieces of data needed to compute _________ for hourly rate basis employeesare the number of hours worked during the payroll period, and the rate of pay. gross pay Tax-exempt __________ wages are earnings in excess of the base amount set by the Social Security Act. Employee’s Withholding Allowance The _______________________________ __________________ is a form used to claim exemption (withholding) allowances. Certificate, Form W-4

  17. R E V I E W SECTION Complete the following sentences: As the number of withholding allowances increases, the amount of federal tax withheld _________. decreases wage-bracket table The _________________ method is a simple method to determine the amount of federal income tax to be withheld using the tables provided by the government. payroll register The _____________ is a record of payroll information for each employee for the pay period.

  18. Thank You for using College Accounting, 11th Edition Price • Haddock • Brock

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