Appendix H - Payroll accounting. The following will be discussed in this chapter: Compute and record the payroll for a pay period, record the payroll for a pay period, record employer payroll taxes, discuss the objectives of internal control for payroll. | Accounting in Action Learning Objectives After studying this chapter, you should be able to: [1] Compute and record the payroll for a pay period. [2] Describe and record employer payroll taxes. [3] Discuss the objectives of internal control for payroll. AppendixH Payroll Accounting “Payroll” pertains to both: Salaries - managerial, administrative, and sales personnel (monthly or yearly rate). Wages - store clerks, factory employees, and manual laborers (rate per hour). Involves computing three amounts: (1) gross earnings, (2) payroll deductions, and (3) net pay. Accounting for Payroll Determining the Payroll LO 1 Total compensation earned by an employee (wages or salaries, plus any bonuses and commissions). Gross Earnings Determining the Payroll LO 1 Illustration H-1 Computation of total wages Mandatory: FICA tax Federal income tax State income tax Payroll Deductions Voluntary: Charity Insurance Union dues Pension plans Determining the Payroll LO 1 Mandatory: FICA tax Federal income tax State income tax Social Security and Medicare tax Supplemental retirement, employment disability, and medical benefits. Determining the Payroll Payroll Deductions LO 1 Illustration H-3 FICA tax rate and tax base Employers are required to withhold income taxes from employees’ pay. Withholding amounts are based on gross wages and the number of allowances claimed. Determining the Payroll Mandatory: FICA tax Federal income tax State income tax Payroll Deductions LO 1 Most states (and some cities) require employers to withhold income taxes from employees’ earnings. Determining the Payroll Mandatory: FICA tax Federal income tax State income tax Payroll Deductions LO 1 Gross earnings minus payroll deductions. Net Pay Determining the Payroll LO 1 Illustration H-6 Computation of net pay LO 1 Maintaining Payroll Department Records Recording the Payroll Illustration H-7 Employee earnings record Maintaining Payroll Department Records Recording the Payroll LO 1 Illustration H-8 Payroll register | Accounting in Action Learning Objectives After studying this chapter, you should be able to: [1] Compute and record the payroll for a pay period. [2] Describe and record employer payroll taxes. [3] Discuss the objectives of internal control for payroll. AppendixH Payroll Accounting “Payroll” pertains to both: Salaries - managerial, administrative, and sales personnel (monthly or yearly rate). Wages - store clerks, factory employees, and manual laborers (rate per hour). Involves computing three amounts: (1) gross earnings, (2) payroll deductions, and (3) net pay. Accounting for Payroll Determining the Payroll LO 1 Total compensation earned by an employee (wages or salaries, plus any bonuses and commissions). Gross Earnings Determining the Payroll LO 1 Illustration H-1 Computation of total wages Mandatory: FICA tax Federal income tax State income tax Payroll Deductions Voluntary: Charity Insurance Union dues Pension plans Determining the Payroll LO 1 Mandatory: FICA tax Federal income .
