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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