1. 10-105

2. Payroll Computations, Records, and Payment Section 2: Calculating Earnings and Taxes Chapter 10 Section Objectives 2.Compute gross earnings of employees. 3.Determine employee deductions for social security tax. 4.Determine employee deductions for Medicare tax. 5.Determine employee deductions for income tax. 6.Enter gross earnings, deductions, and net pay in the payroll register. McGraw-Hill© 2007 The McGraw-Hill Companies, Inc. All rights reserved.

3. 10-107 Recording Payroll Information for Employees

4. 10-108 Objective 6 Enter gross earnings, deductions, and net pay in the payroll register.

5. 10-109 A payroll register is a record of payroll information for each employee for the pay period. ANSWER: QUESTION: What is a payroll register?

6. 10-110 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). 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)

7. 10-111 Completing the Payroll Register 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) 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.

8. 10-112 Completing the Payroll Register 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) 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.

9. 10-113 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). 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)

10. 10-114 Completing the Payroll Register Calculate the cumulative earnings after this pay period (Column I). 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)

11. 10-115 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. 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)

12. 10-116 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). 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, George 26.51 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)

13. 10-117 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. 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)

14. 10-118 Completing the Payroll Register 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) Enter the check number in Column R.

15. 10-119 Completing the Payroll Register 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) The payroll register’s last two columns classify employee earnings as office salaries (Column S) or shipping wages (Column T).

16. 10-120 The Payroll Register When the payroll data for all employees has been entered in the payroll register, total the columns.

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

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

19. 10-123 Thank You for using College Accounting, 11th Edition Price Haddock Brock