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Payroll Accounting

Chapter 12. $. Payroll Accounting. Making Accounting Relevant Businesses issue payroll checks to their employees to compensate them for work performed. $. $. If you have a part-time job, what items appear on your pay stub? Do you verify that your gross earnings were properly calculated?. $.

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Payroll Accounting

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  1. Chapter 12 $ Payroll Accounting Making Accounting Relevant Businesses issue payroll checks to their employees to compensate them for work performed. $ $ If you have a part-time job, what items appear on your pay stub? Do you verify that your gross earnings were properly calculated? $

  2. Chapter 12 $ Section 1 Calculating Gross Earnings $ • What You’ll Learn • The importance of accurate payroll records. • How to calculate gross earnings. $ $

  3. Section 1 Calculating Gross Earnings (con’t.) Chapter 12 $ Why It’s Important For many businesses payroll is the largest expense. It is essential that the payroll system accurately determine the gross pay for each employee for every pay period. $ $ • Key Terms • payroll • pay period • payroll clerk • gross earnings • wage • time card • electronic badge readers • commission • overtime rate $

  4. Section 1 Calculating Gross Earnings (con’t.) Chapter 12 $ The Importance of Payroll Records $ • The payroll is a list of the employees and the payments due to each employee for a specific pay period. • A pay period is the amount of time over which an employee is paid. $ $

  5. Section 1 Calculating Gross Earnings (con’t.) Chapter 12 $ The Importance of Payroll Records con.t’ • Business with many employees often hire a payroll clerk who is responsible for preparing the payroll. The payroll clerk: • Makes sure employees are paid on time. • Makes sure each employee is paid the correct amount. • Completes payroll records. • Submits payroll reports. • Pays payroll taxes. $ $ $

  6. Section 1 Calculating Gross Earnings (con’t.) Chapter 12 $ The Importance of Payroll Records (con’t.) $ $ $

  7. Section 1 Calculating Gross Earnings (con’t.) Chapter 12 $ Calculating Gross Earnings The total amount of money an employee earns in a pay period is the employee’s gross earnings. An employee’s pay can be based on: $ $ • salary • hourly wage • commission • salary plus commission or bonus • overtime pay $

  8. Section 1 Calculating Gross Earnings (con’t.) Chapter 12 $ Salary • A salary is a fixed amount of money paid to an employee for each pay period. • An employee who is paid a salary earns the same amount regardless of the number of hours worked during the pay period. $ $ $

  9. Section 1 Calculating Gross Earnings (con’t.) Chapter 12 $ Hourly Wage • A wage is an amount of money paid to an employee at a specified rate per hour worked. • The number of hours worked multiplied by the hourly wage equals the gross earnings for the pay period. $ $ $

  10. Section 1 Calculating Gross Earnings (con’t.) Chapter 12 $ Hourly Wage con’t. • Many employees are required to use time cards. A time card is a record of the times an employee arrives and leaves work each day. • Times may be recorded manually or by a time clock. • Some companies round arrival and departure times to the nearest quarter hour. • ie. 12:25 pm round to 12:30. $ $ $

  11. Section 1 Calculating Gross Earnings (con’t.) Chapter 12 $ Hourly Wage con’t. • Refer to Figure 12-2 on p290. • On a time card: • ¼ hour equals .25 • ½ of an hour equals .5 • ¾ of an hour equals .75 $ $ $

  12. Section 1 Calculating Gross Earnings (con’t.) Chapter 12 $ Hourly Wage con’t. • Electronic badge readers: The employee is issued an identification badge with a magnetic strip that contains employee information. When the employee inserts the identification badge into the badge reader, the magnetic strip is scanned and information is transferred directly to the computer. http://www.qqesttime.com/products/time.php?cp1=googleaws&cp2=ag16+badge+reader $ $ $

  13. Section 1 Calculating Gross Earnings (con’t.) Chapter 12 $ Commission • A commission is an amount paid to an employee based on a percentage of the employee’s sales. • Some salespeople earn a base salary plus a commission or a bonus on the amount of their sales. $ $ $

  14. Section 1 Calculating Gross Earnings (con’t.) Chapter 12 $ Overtime Pay • Employers are required to pay overtime when employees covered by these laws work more than 40 hours per week. • The overtime rate, set by the Fair Labor Standards Act of 1938, is 1½ (1.5) times the employee’s regular hourly pay rate. $ $ $

  15. Demonstration Problems 12-1 to 12-3

  16. 226.48 133.40 195.20

  17. 214.60 166.95 381.55 443.85 293.71

  18. $7.95 212.00 23.85 235.85 $8.25 220.00 49.50 269.50 $7.80 208.00 7.80 215.80

  19. Section 1 Calculating Gross Earnings (con’t.) Chapter 12 $ Check Your Understanding p292. $ • Thinking Critically 1 & 2 • Computing in the Business World • Problem 12-1 $ $

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