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Unit 11 Payroll

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Payroll Administration

Unit 11 – Basic Payroll Accounting

Unit 11 Learning Outcomes
Describe the interaction with an accounting department
Demonstrate a basic journal entry
Set up an account
Summarize amounts paid

Introduction

Every business must keep records showing transactions relating to goods or services rendered and the costs incurred to run the business, known as expenses.
This process is referred to as bookkeeping, which is simply entering each transaction that affects the financial position of the business in a ledger.
The term accounting refers to the process of measuring recording summarizing and analyzing the information recorded in the ledger. This helps the company plan and control the activities of the …show more content…

As we have already learned the employer must pay CPP, EI, EHT, WSIB (in Ontario as other provinces have different statutory requirements) as well as other contractual and volunteer obligations such as health and medical benefits, pension and other benefits they have obligated themselves to pay on behalf of their employees. These expenses are debited to an expense account and credited to a liability account when the payroll is paid each period. Just as with the employee deductions they remain as a current liability from the date the expense is incurred until the remittance is made to the appropriate government agency or business.

EXAMPLE

Journal Entry #:
Date:
Account Name Debit Amount Credit Amount
CPP Expense $1400.00
EI Expense $ 1384.60
CPP Payable $ 1400.00
EI Payable $ 1384.60
Total $2784.60 $2784.60
To record the payroll expenses for the month of July 2011

Journal Entry #:
Date:
Account Name Debit Amount Credit Amount

Employee Dental Benefit
Expense 1092.00
Employee Befits Payable 1092.00
To record employee benefits payable by the employer

Unit Summary

Payroll is usually one of the largest expenses a business has next to capital.
Every company keeps records showing all of the income, expenses and assets and liabilities. This is a very important part of the accounting

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