LESSON 12-1
Preparing Payroll Time Cards
Did you know…
Payroll is one of the largest
expenses to a business?
New Vocabulary
 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
12-1
2
ANALYZING A
PAYROLL TIME CARD
page 341
3 main sections: Morning, Afternoon and Overtime
12-1
3
CALCULATING EMPLOYEE
HOURS WORKED1. Calculate the number
page 342
1
of
regular hours for each
day and enter the
amounts.
2. Calculate the number
of overtime hours and
enter the amounts.
2 3. Add Hours Reg and
Hours OT columns
and enter the totals.
3
4
12-1
4. Add the Hours
column.
4
CALCULATING EMPLOYEE
TOTAL EARNINGS
page 343
1. Enter the rate for regular time
in the Rate column.
2. Calculate the regular
earnings. Enter the amount.
3. Enter the rate for overtime.
4. Calculate the
overtime earnings.
Enter the amount.
5. Add the Amount column to
calculate total earnings. Enter
the amount of total earnings.
1
2
4
3
5
12-1
5
Audit Your Understanding
What is a payroll?
 The total amount earned by all
employees for a period. AKA Salary
Expense
How many hours were worked by a
Hobby Shack employee who arrived
at 8:12 and departed 12:02?
 3.75 hours
12-1
6
Audit Your Understanding
How does Hobby Shack calculate overtime
earnings?
 Overtime hours x overtime rate
What are the total earnings of a Hobby
Shack employee who worked 44 hours in
a week and earns $10 per hour?
 $460 (40 x $10.00 + 4 x $15.00)
12-1
7
Work Together
 In
book
12-1
8
12-2 Determining Payroll Tax Withholding
New Vocabulary





Payroll taxes: Taxes based on the payroll of a business
Withholding allowance: A deduction from full earnings for each
person legally supported by a taxpayer, including the
employee
Social Security tax: A federal tax paid for old-age, survivors,
and disability insurance
Medicare tax: A federal tax paid for hospital insurance
Tax base: The maximum amount of earnings on which a tax is
calculated (Tax base for this textbook: $87,000.00, Actual
2004 tax base set by Congress: $87,900.00. UPDATE: In
2009 it was moved up to $106,500.00)
12-1
9
EMPLOYEE’S WITHHOLDING
ALLOWANCE CERTIFICATE
1
3
page 346
2
4
5
12-1
10
EMPLOYEE’S INCOME TAX
page 348
WITHHOLDING – MARRIED PERSONS
1
2
3
1. Select the appropriate table.
2. Locate the employee’s total earnings.
3. Intersection of wages and number of allowances
12-1
11
Audit Your Understanding
Where does the employer get the information used to
determine the amount of federal income tax to withhold
from employees’ earning?
 Form W-4, Employee’s Withholding Allowance Certificate
Employee federal income tax withholdings are based on
what two factors?
 Employee marital status and number of withholding
allowances
Does the employer or employee pay Social Security tax and
Medicare tax?
 Both the employee and the employer
12-1
12
Work Together

In book
12-1
13
12-3 Preparing Payroll Records
New Vocabulary
 Payroll
register: A business form
used to record payroll information
 Employee earnings record: A
business form used record details
affecting payments made to an
employee
12-1
14
PAYROLL REGISTER
page 351
1
2
4
5
6
7
8
9
10
11
3
13
12
12-1
15
EMPLOYEE EARNINGS RECORDS
page 353
1. Last day of
quarter
2. Employee
personal data
3. Beginning
accumulated
earnings
4
1
5
4. Pay period 2
5. Earnings,
deductions,
net pay
6. Updated
accumulated
earnings
3
6
7
7. Total and prove
12-1
16
Audit Your Understanding
What does the payroll register summarize?
 It summarizes the payroll for one pay period, and shows total
earnings, payroll withholdings, and net pay for all employees
How is net pay calculated?
 By subtracting total deductions from total earnings
Why do companies complete employee earning records?
 Because a business must send a quarterly report to federal
and state governments showing employee taxable earnings
and taxes withheld from employee earnings.
12-1
17
Work Together
 In
book
12-1
18
LESSON 12-4
Preparing Payroll Checks
1.
2.
Most companies pay their employees with
checks written on a special payroll checking
account.
A check for the total net pay is written on the
general checking account to the payroll
checking account.
12-1
19
PAYROLL BANK ACCOUNT
1
2
1. Prepare the check stub.
page 356
2. Prepare the check.
12-1
20
EMPLOYEE’S PAYROLL
CHECK
1
page 357
2
1. Prepare the check stub of each employee’s payroll check.
2. Prepare each employee’s payroll check.
12-1
21
Audit Your Understanding
Why does Hobby Shack have a separate checking
account for payroll checks?
 To help protect and control payroll payments
What is the source of the information that is recorded
on each employee’s payroll check stub?
 The payroll register
12-1
22
Work Together
 In
book
 Julian
Beever’s Sidewalk Art
12-1
23
The End
12-1
43