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Unformatted text preview: g of all information needed to
prepare and issue payroll checks.
2. The generation of payroll records needed for accounting
purposes and for reporting to government agencies,
management, and others.
Businesses with many employees often hire a payroll clerk . The payroll clerk responsible for preparing the payroll
• makes sure employees are paid on time,
makes sure each employee is paid the correct amount,
completes payroll records,
submits payroll reports, and
pays payroll taxes. All payroll systems have certain tasks in common, as shown in
Figure 12–1. 310 Chapter 12 Payroll Accounting 308-337_CH12_868829.indd 310 9/15/05 11:42:15 AM ns
es ea THE PAYROLL SYSTEM roll
to gov Records earnings
in the payroll
records Prepares payroll checks Figure 12–1 The Payroll
System Computing Gross Pay
How Do You Calculate Gross Earnings?
Most employees are paid for the specific amount of time they work
during a pay period. The total amount of money an employee earns in a pay
period is the employee’s gross earnings , or gross pay. The gross earnings
expense is sometimes called salary expense. The method used to compute
gross pay depends on the basis on which an employee is paid. Employees
can be grouped into different pay categories:
• salary plus commission or bonus
piece rate Some employees are entitled to overtime pay. Let’s look at each method
of paying employees. Salary
One common method of paying employees, especially those who are
managers or supervisors, is by salary. A salary is a fixed amount of money
paid to an employee for each pay period. In other words, an employee who
is paid a salary earns the same amount regardless of the number of hours
worked during the pay period. For example, Paula Ferguson, an administrative assistant, is paid a salary of $2,000 a month. Her gross earnings are
$2,000 for each monthly pay period. Paula m...
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