Ch.12 Preparing Payroll Records
Paying Employees
Wage: An amount paid to an employee for every hour worked
Salary: A fixed annual sum of money divided among equal pay periods
Total Earnings: total amount paid by a business for an employees work, earned by wage, salary
or commission
Pay Period: the number of days or weeks of work covered by an employee’s paycheck
Payroll: the total amount earned by all employees for a pay period
Calculating Hourly Employee Total Earnings
 All the information needed to pay the employees comes from their time cards
 Minimum work week is 40 hours
 Anything over 40 hrs is considered overtime and they will receive 1 ½ X regular
hourly wages
 Regulars hours X Regular Rate = Regular Earnings
 Regular Rate X 1 ½ = Overtime Earnings
 Regular Earnings + Overtime Earnings = Total Earnings
88 X $15.00 = $1,320.00
$15.00 X 1 ½ = $146.25
$1320.00 + 146.25 = 1466.25
** Do working together 12-1 pg 350
Payroll Taxes
Withholding Allowance: A deduction from total earnings for each person legally supported by
a taxpayer, including the employee
Payroll deduction: any amount withheld from an employee’s gross earnings
 There are two tax tables, pg 353 & 354 for either single people or married people
Employee Social Security & Medicare Tax
 Social Security tax rate is 6.2% of the total earnings
 Medicare tax rate is 1.45% of the total earnings
Accumulated earnigs: the total gross earnings year to date for an employee
Tax base: the maximum amount of earnings on which a tax is calculated
 The tax base for social security is $106,800
Payroll Registers
Payroll Register: summarizes the earnings, deductions and net pay for all employees for one
pay period
 See the example on page 358
Employee earnings record: a business form used to record details of an employee’s earnings
and deductions
 Figuring accumulated earnings
Accumulated Earnings + Total Earnings Current Pay Period = New Accumulated Earnings
 Figuring Net Pay
Total Earnings - Total Deductions = Net Pay
**Do Working together on page 363
Payroll Bank Account
 There will be two checks written for payroll
 One check will be written for the total amount of payroll, for all employees
 Other checks will be written for the individual employee checks
**Do working together on page 368
**Do application problems 12-1, 12-2, 12-3, 12-4 & 12-M
**Test over chapter 12