Payroll Accounting Examples.Payroll and knowing how to account for payroll are very important in those companies that use workers in the development of their economic activity.Payroll accounting Payroll accounting requires the provision of certain information relating to employee’s attendance time, details of absenteeism, hourly rates of pay, and details of various deductions such as tax and national insurance.
Clock cards or absenteeism reports provide the basic information for the calculation of attendance time, and the employee’s personal record card provides details of the various deductions. Where incentive payment systems are in operation, piecework tickets contain details of the number of items produced by each employee, and this is multiplied by the rate per item to give the total weekly wage.
Where bonus schemes are in operation, the total payment will be based on an attendance time (the time rate wage) plus a bonus. The time rate wage is obtained from the clock card and the bonus details from the job card. Under a bonus scheme, a set time is allowed for each job and a bonus is paid based on The time allowed for a specific operation is 20 hours and the actual time taken by an employee was 16 hours. A bonus system is in operation where employees receive a bonus of 50% of the time saved. In most organizations the payroll accounting function is now likely to be carried out by a computer.
Payroll Accounting Examples.
Ledger accounts Is Used To Post Payroll.To post the payroll we will have to know the accounts that will collect each of the items involved in the payment of a payroll.
- This is how payroll is posted.
- Accounting.
- Comments and clarifications.
- Accounting for withholding at source for salaries.
- Accounting of warrants and judicial seizures.
- Accounting for other payroll items.
- Third parties in the posting of payroll.
For the accounting of the payroll we will use the values determined in the settlement of the payroll that we assume yields the data below.In this example, we assume that the employee belongs to the administrative part, so account 51 of the Colombian single account plan will be used.
The following account groups will be used in the posting process.
- 1105 (Banks).
- 2370 (Withholdings and payroll contributions).
- 2610 (Provisions for labor obligations).
- 5105 (Personnel expenses).
If it were labor that is accounted for as part of the cost, account 6105 would be used.
Accounting Settled
The posting of the payroll is carried out in the following way depending on the concepts settled:
| Code | Account name | Debit | Credit |
| 250505 | Salaries to pay | 885,916 | |
| 237005 | EPS contributions | 106,250 | |
| 237006 | ARL | 4,437 | |
| 237010 | Parafiscal contributions | 76,500 | |
| 238030 | pension funds | 131,751 | |
| 261005 | layoffs | 75,037 | |
| 261010 | Interest on severance pay | 9,004 | |
| 261015 | Holidays | 29,190 | |
| 261020 | Premium services | 75,037 | |
| 510506 | salaries | 700,000 | |
| 510515 | Extra hours | 50,000 | |
| 510518 | commissions | 100,000 | |
| 510520 | transportation assistance | 102,854 | |
| 510530 | layoffs | 75,037 | |
| 510533 | Interest on severance pay | 9,004 | |
| 510536 | Premium services | 75,037 | |
| 510539 | Holidays | 29,190 | |
| 510568 | ARP | 4,437 | |
| 510569 | EPS contributions | 72,250 | |
| 510570 | Pension fund contributions | 98,813 | |
| 510572 | Compensation funds contributions | 34,000 | |
| 510575 | ICBF | 25,500 | |
| 510578 | Sign | 17,000 | |
| Equal sums | 1,380,322 | 1,380,322 |
At the time of accounting for the cost of the course, the entry to be made by the company would be as follows
| Accounting Record – Daily Book | Should | To have |
| (649) Employment training course | 420 | |
| to (572) Banks | 420 |
At the time of deducting social security, the entry to be made would be the following
| Accounting Record – Daily Book | Should | To have |
| (640) Wages and salaries | 1833.33 | |
| (642) SS in charge of the company | 550 | |
| to (476) O.SS creditors | 404.99 | |
| a (4751) Hp Payroll withholdings | 260.15 | |
| a (465) Remuneration pending payment | 1298.19 | |
| a (755) Income from personnel services | 420 |
Accounting for a payroll in advance.
At the moment in which the company delivers the advance to the worker, the entry that will be made to account for the advance, let us imagine that it is 300 euros, would be the following.
month 3
| Accounting Record – Daily Book | Should | To have |
| (465) Remuneration advance | 300 | |
| to (572) Banks | 300 |
When the company pays the payroll, it will have the right to deduct this advance from the payroll to be received.
| Accounting Record – Daily Book | Should | To have |
| (640) Wages and salaries | 1833.33 | |
| (642) SS in charge of the company | 550 | |
| to (476) O.SS creditors | 824.99 | |
| a (4751) Hp Payroll withholdings | 260.15 | |
| a (465) Remuneration pending payment | 998.19 | |
| a (460) Remuneration advance | 300 |
Accounting for a payroll with settlement
Let’s imagine that it is too much to imagine why it is more possible that when dismissing the worker we have to pay him 100 euros as compensation for dismissal in this case the entry to be made would be
| Accounting Record – Daily Book | Should | To have |
| (640) Wages and salaries | 1833.33 | |
| (642) SS in charge of the company | 550 | |
| (641) Settlement | 100 | |
| a (4751) Hp Payroll withholdings | 260.15 | |
| a (465) Remuneration pending payment | 1398.19 | |
| a (476) Creditor SS Organizations | 824.99 |