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PAYROLL ACCOUNTING. WHAT IS PAYROLL?  Payroll – total amount earned by all employees for a pay period.  Pay Period – an amount of time over which an.

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Presentation on theme: "PAYROLL ACCOUNTING. WHAT IS PAYROLL?  Payroll – total amount earned by all employees for a pay period.  Pay Period – an amount of time over which an."— Presentation transcript:

1 PAYROLL ACCOUNTING

2 WHAT IS PAYROLL?  Payroll – total amount earned by all employees for a pay period.  Pay Period – an amount of time over which an employee is paid.  Payroll is often one of the largest expenses of a business.

3 WHY ARE PAYROLL RECORDS IMPORTANT? TTwo goals of payroll system: CCollect and process all information needed to prepare and issue payroll checks. GGenerate payroll records needed for accounting purposes and for reporting to government agencies, management, etc. IInaccuracies in payroll records could cost a business thousands of dollars.

4 HOW DO I CALCULATE GROSS EARNING?  Gross earnings – total amount of money an employee earns in a pay period before deductions (a.k.a. total earnings).  Depends on basis of payment  Salary  Hourly wage  Commission  Salary plus commission or bonus  Overtime pay

5 SALARY  Fixed amount of money paid to an employee for each pay period.  Same amount regardless of hours worked.  Usually used for managers or supervisors.

6 HOURLY WAGE  An amount of money paid to an employee at a specified rate per hour worked.  Time card is used to keep track of hours worked (may be electronic or manual)  Time is rounded to the nearest quarter hour.  Hours worked times hourly wage equals gross earnings.

7 HOURLY WAGE (CONT.) 1.Calculate regular hours. 2.Calculate overtime hours. 3.Add Hours Reg and Hours OT columns and enter totals. 4.Add Hours column. 3 4 2 1 Lesson 13-1, page 313

8 COMMISSION  An amount paid to an employee based on a percentage of the employee’s sales.  Often used to encourage salespeople to increase their sales.  Example: Joyce Torrez is paid a 5% commission on all her sales. Last week Joyce’s total sales were $8,254.  What was Joyce’s gross earnings? $8.254 x.05 = $412.70

9 SALARY PLUS COMMISSION OR BONUS  Some salespeople earn a base salary plus a commission or bonus on the amount of their sales.  Example: Juan Espito is paid a salary of $200 per week plus a commission of 3% of his sales. Juan’s sales were $4,810 last week.  What was Juan’s gross earnings? $200 + ($4,810 x.03) = $344.30

10 OVERTIME PAY  State and federal laws regulate hours worked.  Generally overtime is paid for employees who work more than 40 hours per week.  Overtime rate is 1 ½ times regular hourly rate.  Example: Jesse Dubow worked 43 hours last week. Jesse’s hourly rate is $6.60.  What is Jesse’s gross earnings? Regular earnings:40x$6.60=$264.00 Overtime earnings:3x9.90=29.70 Gross Earnings:$293.70

11 WORK TOGETHER PROBLEM  Complete Work Together 12-1  Begin worksheet on back of notes  Begin Application Problem 12-1

12 HOMEWORK  Complete Application Problem 12-1  Worksheet on back of notes  Begin working on Study Guide 13

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