Lesson Plan – Preparing Payroll – Part 4.1
Course Title – Accounting I
Session Title – Preparing Payroll
Lesson Purpose – Learn payroll procedures from the point of entry with a
time card through calculating payroll, preparing payroll records and special
controls on payroll bank accounts.
Behavioral Objectives






Calculate hours worked using a time card.
Calculate employee payroll and payroll taxes.
Calculate total deductions.
Calculate gross and net pay.
Prepare a payroll register.
Discuss controls used in payroll checking accounts.
Preparation
OLD TEKS Correlations:
2010 TEKS Correlations:
This lesson, as published, correlates
to the following TEKS. Any
changes/alterations to the activities
may result in the elimination of any or
all of the TEKS listed.
120.42.C
3.a. compute gross pay;
3.b. compute net pay;
3.c. compute employee-paid
withholdings;
3.e. compute salary expense;
3.f. post general journal entries;
3.g. prepare a Trial Balance;
This lesson, as published, correlates
to the following TEKS. Any
changes/alterations to the activities
may result in the elimination of any or
all of the TEKS listed.
130.166.C
9.c – calculate employee-paid
earnings such as gross earnings and
net pay;
9.d. – calculate employee-paid
withholdings;
3.g. – post journal entries to general
ledger accounts;
3.h. - prepare trial balances;
TAKS Correlation:
READING
Objective 1: The student will demonstrate a basic understanding of culturally
diverse written texts.
MATH
Objective 10: The student will demonstrate an understanding of the
Lesson 4.1 – Preparing Payroll
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING 1
mathematical processes and tools used in problem solving.
Materials, Equipment and Resources:


Textbook
Spreadsheet software
Teaching Strategies:


Observation
Graded Assignments
Learner Preparation:
Have each student gather information from a business on how the
business’s employees report their time. Have them include why they chose this
particular type of input for reporting work hours as well as other types of reporting
they have used. Include in the report the length of pay period they use in the
business. Your students can get their information from a Manager or Assistant
Manager by telephone interview, personal interview, or e-mail contact.
Ask your students to report their findings to the class in a short
presentation.
Lesson Content:
Introduction to payroll procedures with a beginning emphasis on
terminology related to payroll. Students learn how to calculate hours worked
using a time card and use that calculation to calculate gross pay. The lesson
also covers calculating payroll taxes and adding in other types of deductions.
Students complete payroll registers using all the above skills as well as learn
control systems used in payroll payment.
Assessment:


Observation
Graded Assignments
Additional Resources:
Textbooks:
Guerrieri, Donald J., Haber, Hoyt, Turner. Glencoe Accounting RealWorld Applications and Connections. Glencoe McGraw-Hill 2000.
ISBN/ISSN 0-02-815004-X.
Ross, Kenton, Gilbertson, Lehman, and Hanson. Century 21 Accounting
Multicolumn Journal Anniversary Edition, 1st Year Course. SouthWestern Educational and Professional Publishing, 2003.
Lesson 4.1 – Preparing Payroll
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING 1
ISBN/ISSN: 0-538-43524-0
Ross, Kenton, Gilbertson, Lehman, and Hanson. Century 21 General
Journal Accounting Anniversary Edition, 7th Edition. SouthWestern Educational and Professional Publishing, 2003.
ISBN/ISSN: 0-538-43529-1
Websites:
Lycos Help and How To. Lycos Inc., 2009.
http://howto.lycos.com/lycos/series/1,,10+54+89+23494,00.html.
Compiling Time Sheets. Lycos, Inc., 2009.
http://howto.lycos.com/lycos/step/1,,6+35+26165+26381+22993,00
.html#top. Out of date - replace
Mt. Nebo Accounting Simulation. Carl Lyman, 2009.
http://www.lymansite.net/Acct/MtNeboPumpkins/mtnebo.htm.
Business Partners:


Accountant
Payroll Clerk
Lesson 4.1 – Preparing Payroll
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING 1
Activity 4.1.1 –Terms Related to Payroll
Course Title – Accounting I
Session Title – Preparing Payroll
Activity Purpose – Identify terms that are related to payroll and state their
definitions.
OLD TEKS Correlations:
2010 TEKS Correlations:
This lesson, as published, correlates
to the following TEKS. Any
changes/alterations to the activities
may result in the elimination of any or
all of the TEKS listed.
120.42.C
1.b. - apply information from source
documents
7.a. - follow oral and written
instructions;
7.b. - develop time management skills
by setting priorities for completing
work as scheduled.
This lesson, as published, correlates
to the following TEKS. Any
changes/alterations to the activities
may result in the elimination of any or
all of the TEKS listed.
130.166.C
N/A
TAKS Correlation:
WRITING
Objective 5: The student will produce a piece of writing that demonstrates a
command of the conventions of spelling, capitalization, punctuation, grammar,
usage, and sentence structure.
Objective 6: The student will demonstrate the ability to revise and proofread to
improve the clarity and effectiveness of a piece of writing.
Materials, Equipment and Resources:




Textbook
Internet
Index Cards
Ring to hold index cards
Teaching Strategies:

Observation
Activity 4.1.1 – Terms Related to Payroll
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING 1
Activity Outline:
On an index card, write each of these terms on one side and its definition on the
other side. Use the Internet to assist in defining those terms not in your textbook.
salary
pay period
payroll
total
earnings
payroll taxes
withholding
allowance
Medicare
FICA tax
federal
unemployment
tax
state
unemployment tax
payroll register
tax base
net pay
automatic check
deposit
gross earnings
wage
employee
earnings
record
time card
overtime rate
deduction
allowance
employee’s
earnings record
accumulated
earnings
payroll tax
expense
salaries
FUTA
expense
federal tax
Form 940
deposit coupon
direct
Form W-3
deposit
SUTA
Form 941
Form W-2
FIT tax
commission
direct
deposit
In a team, drill on the terms until everyone in the team knows the terms.
Ask each student to create a test of 10 terms. The test can be fill-in-the-blank,
true/false or multiple choice. Collect the tests and pass them around to the
students. No one should know whose test he or she received.
Go over those terms missed on the student-made test. Give a quiz on the terms.
Assessment:


Observation
Quiz on Terms Related to Payroll
Activity 4.1.1 – Terms Related to Payroll
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING 1
Quiz on Terms Related to Payroll
1.
____________ is an amount paid an employee based on a percent
of the employee’s sales.
2.
FICA stands for
__________________________________________________.
3.
A business form used to record payroll information is a
___________________.
4.
The state tax used to pay benefits to unemployed workers is
_______________.
5.
Taxes based on the payroll of a business are
____________________________.
6.
An Employee’s Withholding Allowance Certificate is
____________________.
7.
Total pay due for a pay period before deductions is
______________________.
8.
A deduction from total earnings for each person legally supported by
a taxpayer is
______________________________________________________.
9.
Used to accurately record work hours during a pay period.
________________.
10.
Employee’s year-to-date earnings are called
____________________________.
11.
Expense account used to record employee’s earnings is
___________________.
12.
FUTA stands for
_________________________________________________.
13.
Used to report the employer’s unemployment (state and federal)
taxes.
______________________________________________________.
14.
The Transmittal of Wage and Tax Statements that are filed by the
employer with the federal government is
_______________________________________.
Activity 4.1.1 – Quiz on Terms Related to Payroll
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING 1
Quiz on Terms Related to Payroll - KEY
1.
Commission is an amount paid an employee based on a percent of
the employee’s sales.
2.
FICA stands for Federal Insurance Contributions Act.
3.
A business form used to record payroll information is a payroll
register.
4.
The state tax used to pay benefits to unemployed workers is state
unemployment tax.
5.
Taxes based on the payroll of a business are payroll taxes.
6.
An Employee’s Withholding Allowance Certificate is Form W-4.
7.
Total pay due for a pay period before deductions is gross earnings.
8.
A deduction from total earnings for each person legally supported by
a taxpayer is withholding allowance.
9.
Used to accurately record work hours during a pay period time card.
10.
Employee’s year-to-date earnings are called accumulated earnings.
11.
Expense account used to record employee’s earnings is salaries
expense.
12.
FUTA stands for Federal Unemployment Tax Act.
13.
Used to report the employer’s unemployment (state and federal)
taxes - Form 940.
14.
The Transmittal of Wage and Tax Statements that are filed by the
employer with the federal government is Form W-3.
Activity 4.1.1 – Quiz on Terms Related to Payroll
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING 1
Activity 4.1.2 – Calculating Time
Course Title – Accounting I
Session Title – Preparing Payroll
Activity Purpose – Demonstrate skill in calculating total hours worked using
time cards.
OLD TEKS Correlations:
2010 TEKS Correlations:
This lesson, as published, correlates
to the following TEKS. Any
changes/alterations to the activities
may result in the elimination of any or
all of the TEKS listed.
120.42.C
1.b. - apply information from source
documents
7.a. - follow oral and written
instructions;
7.b. - develop time management
skills by setting priorities for
completing work as scheduled.
7.c. - make decisions using
appropriate accounting concepts;
7.e. - perform accounting procedures
using manual and automated
methods’
7.g. - demonstrate use of the
numeric keypad by touch.
This lesson, as published, correlates
to the following TEKS. Any
changes/alterations to the activities
may result in the elimination of any or
all of the TEKS listed.
130.166.C
9.a. – interpret time cards to calculate
hours worked
TAKS Correlation:
WRITING
Objective 6: The student will demonstrate the ability to revise and proofread to
improve the clarity and effectiveness of a piece of writing.
MATH
Objective 10: The student will demonstrate an understanding of the
mathematical processes and tools used in problem solving.
Materials, Equipment and Resources:


Textbook
Database software
Activity 4.1.2 – Calculating Time
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING 1
Teaching Strategies:


Observation
Demonstration
Activity Outline:
During the payroll unit, have each student keep their time on their projects in a
database. Ask them to use the Time and Billing template with the Time Card
hour form. They can use the switchboard to enter their own name and keep up
with their time on each project. If you want, you can have them enter a billing
rate based on their last report card. Students with an “A” would receive $7.00 an
hour. Those with a “B” would receive $6.50 an hour. Those with a “C” would
receive $6.00 an hour. Those below “C” would receive $5.50 an hour. Print a
report for the Instructor when the payroll unit is finished. Save as: Time.
Assessment:


Observation
Graded Assignment
Quality Feature
Uses correct template and form
Time kept accurately each day during the unit
Work saved in the database
Report appropriate
Activity 4.1.2 – Calculating Time
Score
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING 1
Activity 4.1.3 –Calculating Payroll
Course Title – Accounting I
Session Title – Preparing Payroll
Activity Purpose – Demonstrate skill in calculating total hours worked using
time cards.
OLD TEKS Correlations:
2010 TEKS Correlations:
This lesson, as published, correlates
to the following TEKS. Any
changes/alterations to the activities
may result in the elimination of any or
all of the TEKS listed.
120.42.C
1.b. - apply information from source
documents;
3.a. - compute gross pay;
3.b. - compute net pay;
3.c. - compute employee-paid
withholdings;
3.e. - compute salary expense;
7.a. - follow oral and written
instructions;
7.b. - develop time management
skills by setting priorities for
completing work as scheduled.
7.c. - make decisions using
appropriate accounting concepts;
7.e. - perform accounting procedures
using manual and automated
methods’
7.g. - demonstrate use of the
numeric keypad by touch.
This lesson, as published, correlates
to the following TEKS. Any
changes/alterations to the activities
may result in the elimination of any or
all of the TEKS listed.
130.166.C
9.c – calculate employee-paid
earnings such as gross earnings and
net pay;
9.d. – calculate employee-paid
withholdings;
TAKS Correlation:
MATH
Objective 10: The student will demonstrate an understanding of the
mathematical processes and tools used in problem solving.
Materials, Equipment and Resources:


Textbook
Spreadsheet software
Activity 4.1.3 – Calculating Payroll
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING 1
Teaching Strategies:



Observation
Demonstration
Quiz on Formulas for Payroll
Activity Outline:
Have students use spreadsheet software to create a spreadsheet to calculate
payroll. Demonstrate the formulas. Emphasize learning the formulas in the
comments in the spreadsheet.
Assessment:



Observation
Quiz
Graded Assignment
Quality Feature
Spreadsheet formulas accurate
Net pay accurate on each line
Completes in a timely manner
Saves as instructed
Activity 4.1.3 – Calculating Payroll
Score
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING 1
Employee Name
Mullins, Mary
Maynard, Mark
Jameson, James
Mitchell, Mitch
Driggers, Donals
Broadway, Bridget
Kelly, Karin
Samuels, Sally
Strickland, Shawn
Hours
Wage per Overtime
worked
hour
Rate
42
6.95
10.43
35
12.50
18.75
45
9.00
13.50
25
5.60
8.40
40
7.70
11.55
42
6.20
9.30
50
13.50
20.25
36
10.00
15.00
Regular
Overtime
Regular
Overtime
Hours
Hours
Earnings
Earnings
40.00
2.00
278.00
20.85
35.00
0.00
437.50
0.00
40.00
5.00
360.00
67.50
25.00
0.00
140.00
0.00
40.00
0.00
308.00
0.00
40.00
2.00
248.00
18.60
40.00
10.00
540.00
202.50
36.00
0.00
360.00
0.00
Gross
Earnings
298.85
437.50
427.50
140.00
308.00
266.60
742.50
360.00
400.00
FICA
FIT Tax
Total
Deductions
Net Pay
298.85
39.38
39.00
26.00
227.60
Quiz on Formulas for Payroll
1. Mary Mullins works for $6.95 an hour. She worked for 42 hours last
week. What is her gross pay?
2. Mark Maynard works for $12.50 an hour. He worked 35 hours last
week. At 9% social security, how much is his FICA Tax deduction?
3. James Jameson works for $9.00 an hour. He worked 45 hours last
week. What is his overtime rate?
4. Mitch Mitchell works for $5.60 an hour. He worked 25 hours last week.
How much is his overtime pay?
5. Donald Driggers works for $7.70 an hour. He worked 40 hours last
week. How much are his gross earnings?
6. Bridget Broadway works for $6.20 an hour. She worked 42 hours last
week. Her total deductions are $ 39.00. How much is her net pay?
7. Karin Kelly works for $13.50 an hour. She worked 50 hours last week.
How much is her overtime pay?
8. Sally Samuels works for $10.00 an hour. She worked 36 hours last
week. How much are her gross earnings?
9. Shawn Strickland earned $400.00 total earnings last week. He is
single with 1 allowance. What is his FIT Tax?
Activity 4.1.3 – Quiz on Formulas for Payroll
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING 1
Quiz on Formulas for Payroll - KEY
10. Mary Mullins works for $6.95 an hour. She worked for 42 hours last
week. What is her gross pay? $291.90
11. Mark Maynard works for $12.50 an hour. He worked 35 hours last
week. At 9% social security, how much is his FICA Tax deduction?
$39.38
12. James Jameson works for $9.00 an hour. He worked 45 hours last
week. What is his overtime rate? $13,59
13. Mitch Mitchell works for $5.60 an hour. He worked 25 hours last week.
How much is his overtime pay? $0
14. Donald Driggers works for $7.70 an hour. He worked 40 hours last
week. How much are his gross earnings? $308.00
15. Bridget Broadway works for $6.20 an hour. She worked 42 hours last
week. Her total deductions are $ 39.00. How much is her net pay?
$227.60
16. Karin Kelly works for $13.50 an hour. She worked 50 hours last week.
How much is her overtime pay? $202.50
17. Sally Samuels works for $10.00 an hour. She worked 36 hours last
week. How much are her gross earnings? $360.00
18. Shawn Strickland earned $400.00 total earnings last week. He is
single with 1 allowance. What is his FIT Tax? $26.00 (based on 2009
tax table: http://www.irs.gov/pub/irs-pdf/p15t.pdf
Activity 4.1.3 – Quiz on Formulas for Payroll
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING 1
Activity 4.1.4 –Computerized vs. Manual
Payroll Registers
Course Title – Accounting I
Session Title – Preparing Payroll
Activity Purpose – Make comparisons in computer-generated and manual
payroll registers.
OLD TEKS Correlations:
2010 TEKS Correlations:
This lesson, as published, correlates
to the following TEKS. Any
changes/alterations to the activities
may result in the elimination of any or
all of the TEKS listed.
This lesson, as published, correlates
to the following TEKS. Any
changes/alterations to the activities
may result in the elimination of any or
all of the TEKS listed.
130.166.C
9.e –prepare a payroll register
120.42.C
1.b. - apply information from source
documents;
3.f. - prepare payroll registers
7.a. - follow oral and written
instructions;
7.b. - develop time management
skills by setting priorities for
completing work as scheduled.
7.c. - make decisions using
appropriate accounting concepts;
7.e. - perform accounting
procedures using manual and
automated methods
TAKS Correlation:
WRITING
Objective 5: The student will produce a piece of writing that demonstrates a
command of the conventions of spelling, capitalization, punctuation, grammar,
usage, and sentence structure.
Objective 6: The student will demonstrate the ability to revise and proofread to
improve the clarity and effectiveness of a piece of writing.
Materials, Equipment and Resources:


Textbook
Guest Speaker
Activity 4.1.4 – Computerized vs. Manual
Payroll Registers
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING 1

Word processing software
Teaching Strategies:


Observation
Demonstration
Activity Outline:
Have your students prepare several payroll registers manually until most
students in the class can complete a payroll register with 95% accuracy.
Invite a guest speaker to demonstrate a computerized payroll system like
Peachtree.
Ask your students to write a summary of the differences in preparing the payroll
register manually and by computer software. List the advantages and/or
disadvantages of each. Compare the finished product—the report. How are they
similar? How are they different?
Assessment:


Observation
Graded Assignment
Quality Feature
Score
Summary well-written
Summary thorough with several good observations about both
methods of doing payroll
Summary error-free
Summary in proper business report format
Completes in a timely manner
Participates appropriately with the guest speaker
Activity 4.1.4 – Computerized vs. Manual
Payroll Registers
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING 1
Activity 4.1.5 –Control Systems in Payroll Bank
Accounts
Course Title – Accounting I
Session Title – Preparing Payroll
Activity Purpose – Demonstrate understanding of payroll bank accounts.
OLD TEKS Correlations:
2010 TEKS Correlations:
This lesson, as published, correlates
to the following TEKS. Any
changes/alterations to the activities
may result in the elimination of any or
all of the TEKS listed.
120.42.C
1.b. - apply information from source
documents;
3.i. - determine methods of
dissemination of payroll funds, for
example, direct deposit, and mail;
7.a. - follow oral and written
instructions;
7.b. - develop time management
skills by setting priorities for
completing work as scheduled.
7.c. - make decisions using
appropriate accounting concepts;
7.e. - perform accounting procedures
using manual and automated
methods;
7.g. - demonstrate the use of the
numeric keypad by touch.
This lesson, as published, correlates
to the following TEKS. Any
changes/alterations to the activities
may result in the elimination of any or
all of the TEKS listed.
130.166.C
N/A
TAKS Correlation
N/A
Materials, Equipment and Resources:

Textbook
Teaching Strategies:



Discussion
Observation
Questioning
Activity 4.1.5 Control Systems in Payroll
Bank Accounts
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING 1
Activity Outline:
Lead a class discussion about the use of a special account for payroll. Point out
the advantages and need for having a payroll control system in place.
Demonstrate writing the check for net pay from the general account. This
amount is then deposited in the payroll account. Only that exact amount can be
written from the account. This helps control unauthorized payments as well as
keep it in balance. The payroll account preprinted checks are different from the
general account checks. Demonstrate the difference in the checks using the
projector or overhead.
Discuss different methods of disseminating employee payroll checks, including
direct deposit, electronic funds transfer and mail.
Ask your students these questions:




Why is there a need for a special account for payroll rather than just
writing payroll checks directly from the general account?
The check written from the general account is written for what amount?
What is different in the preprinted checks from the general account and
the payroll account?
What is the most common method of disseminating payroll checks
today? Why?
Assessment:


Observation
Participation
Activity 4.1.5 Control Systems in Payroll
Bank Accounts
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING 1