RMIT Classification: Trusted

Welcome to the Week 3

Set up and manage payroll systems

FNSTPB412 Establish and maintain

payroll systems

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What we learnt so far…..

Chapter 1

Introduction to Payroll

Legislation & Regulatory Bodies

Collecting Data

Chapter 2
Payroll elements
– Gross wages

– Overtime
– Allowances

[Link] Payroll Accounting

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Payroll Accounting
Chapter Three
Processing Payroll

Payroll Accounting
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Learning Objective – Week 3

3.1 Payroll Records – Session 1

3.2 Preparing the Payroll Register – Session 1

3.3 Accounting for Payroll – Session 2

Quiz 2 – Due this week

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3.1 Payroll Records

Records of payroll related matters are required to
be retained by the business.

Whether the business has a manual accounting

system for payroll or a computerised system,
the records are the same for all businesses.

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Hours Worked Record

Recording hours of work can be undertaken by:

• Time card.
• Attendance book.
• Timesheet.
• Electronic timekeeping system report.

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Payroll Register
A Payroll Register is also known as a wages sheet or wages book.

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Employee Earnings Card

• In a payroll system, the employer keeps a
record of earnings by each employee.
• Details of the employee’s pay are recorded on
an Employee Earnings Card each pay day.

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Pay Advice (Payslip)

A Pay Advice accompanies every payment to the
employee and shows gross pay, PAYG Withheld,
deductions, net pay and superannuation
contributions made by the employer.

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Pay Advice (Payslip)

Go to [Link] and search for “Pay
slips” to download the template. Familiarise
yourself with the content of the template.

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Pay Advice (Payslip)

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Pay Advice (Payslip)

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3.2 Preparing the Payroll Register

Payroll Register is totalled and cross-balanced, before being used

for:

• Updating employee pay history.

• Preparing pay advices.

• Preparation of accounting entries for payroll.

• Payment of wages – paid by cash, cheque or bank transfer.

• Payment of monthly payroll liabilities e.g. PAYG Withholding,

superannuation, medical insurance etc.

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Example: Payroll register (Chapter 3.2)

Ord hours O/T hours PL (hours)

A Chips 35 2
J Driver 28 6 7
S Cable 35 0

Payroll Accounting
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Payroll Accounting
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2 weeks annual leave =

2 x 35 hours = 70 hours

Payroll Accounting
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Example: Payroll Register

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Self-testing exercise 1

Payroll Accounting
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ACTIVITIES
Chapter review exercise #3 (Pg. 131)

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Payroll Accounting
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Fruit Cake Bakery - Payroll Register 27 May

Hours Earnings Gross Deductions
Name Rate/hour Net pay
Ord 1.5 2 PL AL Ord 1.5 2 PL AL pay Tax Super Health ins Union dues Total
Raisin $30 38 1,140 1,140 211 20 - 25 256 884
Sultana $35 22.8 15.2 798 532 1,330 276 40 316 1,014
Currant $32 38 6 2 1,216 288 128 1,632 381 40 421 1,211
15 3,154 288 128 532 4,102 868 60 40 25 993 3,109

Payroll Accounting
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ACTIVITIES
Chapter review exercise #4 (Pg. 133)

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Any
questions?

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BREAK

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3.3 Accounting for Payroll

Key Points to preparing journal entries for payroll:
Gross Pay is an expense incurred by a business
for a particular pay period.
If Non-Taxable allowances are paid, these must
be identified separately in the ledger.

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Preparing Journal Entries for Payroll

Deductions are liabilities representing the

withheld amounts ( e.g. ) PAYG.

Net Pay is amounts owing to employees and are

credited to the Wages Payable.

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Preparing Journal Entries for Payroll

Payment of deductions requires a debit entry to
the deduction liability.

Payment of Net Pays

• Payment by cheque requires a journal entry for
each pay; one entry per cheque written.
• Each net pay to be paid by EFT batch is credited
to the Electronic Clearing Account.
• When payment is in cash, one cheque is issued to
cover all net pays being paid in cash.

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Note and Coinage Analysis

This ensures that there will be the exact change

available to fill the pay envelopes.

Because the smallest coin is 5 cents, each

employee’s net pay is rounded up or down to the
nearest 5 cents.

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Example – Preparing journal entries

Payroll Accounting
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Payroll Accounting
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Payroll Accounting
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ACTIVITIE - CHAPTER REVIEW EX

Chapter review exercise #4 (Pg. 133)

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Payroll Accounting

Payroll Accounting
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ACTIVITY – CHAPTER REVIEW EX

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Self-testing exercise 2

Payroll Accounting
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Payroll Accounting
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Self-testing exercise 2
Date Particulars Debit Credit
27-NovWages Expenses (gross pay) 4,102
a Electronic clearing (Net pays) 3,109
PAYG Withholding tax payable 868
Superannuation payable 60
Health Insurance payable 40
Union dues payable 25
Payroll for week ended 27 November as per payroll
register

b Electronic clearing (Net pays) 3,109

Cash at bank 3,109
Wages paid by EFT batch

c
31-MayPAYG Withholding tax payable 2,962
Superannuation payable 240
Health Insurance payable 160
Union dues payable 100
Cash at bank 3,462
Payment of deducted amounts for month of May

Payroll Accounting
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Self-testing exercise 3

Payroll Accounting
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Self-testing exercise 3

Date Particulars Debit Credit

26-JunWages Expenses (gross pay) 16,519
a Electronic clearing (Net pays) 10,399
PAYG Withholding tax payable 4,100
Superannuation payable 1,500
Health Insurance payable 400
Union dues payable 120
Payroll for week ended 26 June as per payroll register

b Electronic clearing (Net pays) 10,399

Cash at bank 10,399
Wages paid by EFT batch

c
30-JunPAYG Withholding tax payable 14,504
Superannuation payable 5,768
Health Insurance payable 1,620
Union dues payable 420
Cash at bank 23,213
Payment of deducted amounts for month of June

Payroll Accounting
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Self-testing exercise 4

Payroll Accounting
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Any
questions?

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