1. 10-146

2. Payroll Computations, Records, and Payment Section 3: Recording Payroll Information Chapter 10 Section Objectives 7.Journalize payroll transactions in the general journal. 8.Maintain an earnings record for each employee. McGraw-Hill© 2007 The McGraw-Hill Companies, Inc. All rights reserved.

3. 10-148 Individual Earnings Records

4. 10-149 Objective 8 Maintain an earnings record for each employee.

5. 10-150 An individual earnings record is a record that contains information needed to compute earnings and complete tax reports. ANSWER: QUESTION: What is an individual earnings record?

6. 10-151 The earnings record shows: The payroll period EARNINGS RECORD FOR 20-- NAME Alicia Martinez RATE $10 per hour SOC. SEC. NO. 123-xx-xxxx ADDRESS 1712 Windmill Hill Lane, Dallas, TX 75232 DATE OF BIRTH Nov. 23, 1979 WITHHOLDING ALLOWANCES 1 MARITAL STATUS M

7. 10-152 The earnings record shows: EARNINGS RECORD FOR 20-- NAME Alicia Martinez RATE $10 per hour SOC. SEC. NO. 123-xx-xxxx ADDRESS 1712 Windmill Hill Lane, Dallas, TX 75232 DATE OF BIRTH Nov. 23, 1979 WITHHOLDING ALLOWANCES 1 MARITAL STATUS M The date paid

8. 10-153 The earnings record shows: EARNINGS RECORD FOR 20-- NAME Alicia Martinez RATE $10 per hour SOC. SEC. NO. 123-xx-xxxx ADDRESS 1712 Windmill Hill Lane, Dallas, TX 75232 DATE OF BIRTH Nov. 23, 1979 WITHHOLDING ALLOWANCES 1 MARITAL STATUS M The regular and overtime hours

9. 10-154 The earnings record shows: EARNINGS RECORD FOR 20-- NAME Alicia Martinez RATE $10 per hour SOC. SEC. NO. 123-xx-xxxx ADDRESS 1712 Windmill Hill Lane, Dallas, TX 75232 DATE OF BIRTH Nov. 23, 1979 WITHHOLDING ALLOWANCES 1 MARITAL STATUS M The regular and overtime earnings

10. 10-155 The earnings record shows: EARNINGS RECORD FOR 20-- NAME Alicia Martinez RATE $10 per hour SOC. SEC. NO. 123-xx-xxxx ADDRESS 1712 Windmill Hill Lane, Dallas, TX 75232 DATE OF BIRTH Nov. 23, 1979 WITHHOLDING ALLOWANCES 1 MARITAL STATUS M The deductions

11. 10-156 The earnings record shows: EARNINGS RECORD FOR 20-- NAME Alicia Martinez RATE $10 per hour SOC. SEC. NO. 123-xx-xxxx ADDRESS 1712 Windmill Hill Lane, Dallas, TX 75232 DATE OF BIRTH Nov. 23, 1979 WITHHOLDING ALLOWANCES 1 MARITAL STATUS M The net pay

12. 10-157 EARNINGS RECORD FOR 20-- NAME Alicia Martinez RATE $10 per hour SOC. SEC. NO. 123-xx-xxxx ADDRESS 1712 Windmill Hill Lane, Dallas, TX 75232 DATE OF BIRTH Nov. 23, 1979 WITHHOLDING ALLOWANCES 1 MARITAL STATUS M The earnings records are totaled monthly and at the end of each calendar quarter. This provides information needed to make tax payments and file tax returns. Totaled monthly earnings

13. 10-158 Completing January Payrolls

14. 10-159 In order to complete the January payroll for Kent Furniture and Novelty Co., assume that all employees worked the same number of hours each week of the month as they did the first week. Thus they had the same earnings, deductions, and net pay each week.

15. 10-160 Entry to Record Payroll

16. 10-161 Entry to Record Payroll One general journal entry is made to record the weekly payroll expense for all employees of Kent Furniture and Novelty Co. This general journal entry records the payroll expense and liability, but not the payments to employees.

17. 10-162 AND ENDING January 6, 20-- PAID January 8, 20-- DEDUCTIONS DISTRIBUTION NAME SOCIAL MEDICARE INCOME HEALTH NET CHECK OFFICE SHIPPING SECURITY TAX INSURANCEAMOUNT NO. SALARIES WAGES Martinez, Alicia 22.325.22 28.00 304.461725360.00 Rodriguez, Jorge23.565.51 42.00 308.931726380.00 Dunlap, George18.604.35 14.0020.00 243.051727300.00 Wu, Cecil 32.247.54 44.0020.00 416.221728520.00 Booker, Cynthia 24.805.80 45.00 324.401729 400.00 139.35 32.58 155.0080.00 1,840.57 480.00 1,767.50 M N O P Q R S T GENERAL JOURNAL PAGE 1 DATE DESCRIPTION POST. DEBIT CREDIT REF. 20-- Jan. 8 Shipping Wages Expense 1767.50 Social Security Tax Payable 139.35 Medicare Tax Payable 32.58 Payroll for week ending Jan. 6 Office Salaries Expense 480.00 Employee Income Tax Payable 155.00 Health Insurance Premiums Payable 80.00 Salaries and Wages Payable 1,840.57 Since we are assuming an identical payroll for each week of the month, each of the four weekly payrolls require general journal entries identical to the one shown here.

18. 10-163 Entry to Record Payment of Payroll

19. 10-164 CASH PAYMENTS JOURNAL PAGE 1 ACCOUNTS SALARIES PURCHASES DATE CK. DESCRIPTION POST. PAYABLE AND WAGES DISCOUNT CASH NO. REF. DEBIT PAYABLE DEBIT CREDIT CREDIT Jan. 2 1589 Intl. Furniture 1,400.00 28.00 1,372.00 Company 8 1601 Alicia Martinez 350.40 350.40 8 1602 Jorge Rodriguez 316.93 316.93 8 1603 George Dunlap 331.80 331.80 8 1604 Cecil Wu 447.16 447.16 8 1605 Cynthia Booker 394.28 394.28 31 Totals xxxx.xx 7,362.28 xxxx.xx xxxx.xx At the end of January, the columns in the cash payments journal are totaled, including the Salaries and Wages Payable Debit column.

20. 10-165 Postings to Ledger Accounts

21. 10-166 GENERAL JOURNAL PAGE 1 DATE DESCRIPTION POST. DEBIT CREDIT REF. 2004 Jan. 8 Shipping Wages Expense 1,767.50 Social Security Tax Payable 139.35 Medicare Tax Payable 32.58 Payroll for week ending Jan. 6 Employee Income Tax Payable 155.00 Health Insurance Premiums Payable 80.00 Salaries and Wages Payable 1,840.57 Office Salaries Expense 480.00 Salaries and Wages Payable 1/31 7,362.28 1/8 1,840.57 1/15 1,840.57 1/22 1,840.57 1/29 1,840.57 Office Salaries Expense 1/8 480.00 1/15 480.00 1/22 480.00 1/29 480.00 The entries to record the weekly payroll expense and liability amounts are posted from the general journal to the accounts in the general ledger.

22. 10-167 The total of the Salaries and Wages Payable Debit column in the cash payments journal is posted to the Salaries and Wages Payable general ledger account. CASH PAYMENTS JOURNAL PAGE 1 ACCOUNTS SALARIES PURCHASES DATE CK. DESCRIPTION POST. PAYABLE AND WAGES DISCOUNT CASH NO. REF. DEBIT PAYABLE DEBIT CREDIT CREDIT Jan. 2 1589 Intl. Furniture 1,400.00 28.00 1,372.00 Company 8 1601 Alicia Martinez 350.40 350.40 8 1602 Jorge Rodriguez 316.93 316.93 8 1603 George Dunlap 331.80 331.80 8 1604 Cecil Wu 447.16 447.16 8 1605 Cynthia Booker 394.28 394.28 31 Totals xxxx.xx 7,362.28 xxxx.xx xxxx.xx Salaries and Wages Payable 1/31 7,362.28 1/8 1,840.57 1/15 1,840.57 1/22 1,840.57 1/29 1,840.57

23. REVIEWREVIEW The information for the general journal entry to record the payroll expense comes from the _____________. When payroll expense is recorded, net pay is _______ to the liability account, Salaries and Wages Payable. Paychecks can be written on the _______ checking account or on a separate ______ account. Complete the following sentences: credited regular payroll register payroll SECTION

24. REVIEWREVIEW In the ___________________ of paying employees, the bank electronically transfers net pay from the employer’s account to the personal account of the employee. The _______________________ contains information needed to compute earnings for each employee. The Salaries and Wages Payable account is _______ when paychecks are written. individual earnings record direct deposit method Complete the following sentences: debited SECTION

25. 10-170 Thank You for using College Accounting, 11th Edition Price Haddock Brock