LESSON 12-1 Preparing Payroll Time Cards Did you know… Payroll is one of the largest expenses to a business?
12-12 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
12-13 ANALYZING A PAYROLL TIME CARD page 341 3 main sections: Morning, Afternoon and Overtime
12-14 4.Add the Hours column. CALCULATING EMPLOYEE HOURS WORKED page 342 1 2 3 4 3.Add Hours Reg and Hours OT columns and enter the totals. 2.Calculate the number of overtime hours and enter the amounts. 1.Calculate the number of regular hours for each day and enter the amounts.
12-15 CALCULATING EMPLOYEE TOTAL EARNINGS page 343 3 1 2 4 5 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.
12-16 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
12-17 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)
12-19 12-2 Determining Payroll Tax Withholding New 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)
12-111 EMPLOYEE’S INCOME TAX WITHHOLDING – MARRIED PERSONS page 348 1 23 1.Select the appropriate table. 2.Locate the employee’s total earnings. 3.Intersection of wages and number of allowances
12-112 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
12-114 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
12-116 EMPLOYEE EARNINGS RECORDS page 353 7. Total and prove 5.Earnings, deductions, net pay 2.Employee personal data 1 1.Last day of quarter 4.Pay period 3.Beginning accumulated earnings 6. Updated accumulated earnings 4 2 7 6 3 5
12-117 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.
12-119 LESSON 12-4 Preparing Payroll Checks 1. Most companies pay their employees with checks written on a special payroll checking account. 2. A check for the total net pay is written on the general checking account to the payroll checking account.
12-120 PAYROLL BANK ACCOUNT 1.Prepare the check stub. page 356 2.Prepare the check. 12
12-121 EMPLOYEE’S PAYROLL CHECK page 357 1.Prepare the check stub of each employee’s payroll check. 2.Prepare each employee’s payroll check. 21
12-122 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
12-123 Work Together In book Julian Beever’s Sidewalk Art