CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 3-1 Completing Payroll Records for Employee Earnings and Deductions

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning OBJECTIVES Identify accounting concepts and practices related to a departmental payroll system Prepare a commissions record and calculate commission on sales Complete payroll records 2 LESSON 3-1

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning COMPLETING PAYROLL RECORDS FOR EMPLOYEE EARNINGS AND DEDUCTIONS 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 Payroll taxes: taxes based on the payroll of a business 3 LESSON 3-1

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning COMPLETING PAYROLL RECORDS FOR EMPLOYEE EARNINGS AND DEDUCTIONS Withholding allowance: a deduction from total earnings for each person legally supported by a taxpayer Tax base: the maximum amount of earnings on which a tax is calculated 4 LESSON 3-1

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning COMPLETING PAYROLL RECORDS FOR EMPLOYEE EARNINGS AND DEDUCTIONS Employees are required by law to withhold tree federal taxes from their pay 1.Federal income tax 2.Social security tax 3.Medicare tax Some states and/or cities have income taxes that employers must withhold from an employee’s pay Employers may also make deductions from employee earnings for health insurance, life insurance, pension plans, and savings deposits 5 LESSON 3-1

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 6 LESSON 3-1 PAYROLL DEDUCTIONS page 61

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning CALCULATING EMPLOYEE EARNINGS 7 LESSON 3-1 Pay periods can be Weekly Semimonthly Monthly Identification card scanner : used to log employee hours; consist of a magnetic strip coded to include employee name and identification number Overtime : all time worked in excess of 40 hours in any one week Employees are paid 1 1/2 times the regular rate

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 8 LESSON 3-1 Regular HoursRegular RateRegular Earnings  CALCULATING EMPLOYEE EARNINGS 80  $7.00 per hour  $ Overtime Earnings = Overtime HoursRegular Rate1.5  = $  $7.00  1.5 Regular Earnings Overtime Earnings Total Earnings  $  $52.50  $ page 62

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 9 LESSON Record heading information. 3.Calculate commission on net sales. COMMISSIONS RECORD page 63 2.Obtain amounts and calculate totals

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 10 LESSON Totals 8.Net pay PREPARING A PAYROLL REGISTER pages Date of payment 3.Employee information 4.Hours and earnings 5.Total earnings by department 6.Payroll deductions 7.Total deductions 1.Payroll period ending date 9 9

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 11 LESSON Find the column with the correct number of withholding allowances. 1.Locate the range containing the total earnings. 3.Find the intersection of the row and column. USING THE FEDERAL INCOME TAX WITHHOLDING TABLE page

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 12 LESSON Record beginning accumulated earnings. 1.Write last day of quarter. 4.Write ending day of pay period. 2.Enter heading information. 5.Enter total earnings, deductions, and net pay. 6.Calculate and record accumulated earnings. PREPARING AN EMPLOYEE EARNINGS RECORD page

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 13 LESSON 3-1 TERMS REVIEW salary pay period payroll payroll taxes withholding allowance tax base payroll register employee earnings record page 68