Company's Payroll

Employees within a business are paid either on a weekly basis, a semi-monthly basis (twice a month), or a monthly basis.  When an employee is paid an hourly rate, the number of hours that employee has worked within the pay period are multiplied by the hourly rate.  Any time over 40 hours per week has to be paid overtime (which is one-and-a-half times the hourly rate).  When an employee is paid a salary, the number of hours put into the job make no difference.  The amount is usually the same each pay period.  Let's look at Utah Lumber Company's current payroll listing:

Utah Lumber Company pays its employees semi-monthly (twice a month).  The pay periods fall on the 5th and 20th of each month.  The bookkeepers have to make sure that each persons pay check is ready for pickup on these dates.  The normal number of hours worked each week is 40 hours.  Anytime overtime is worked, the employee is paid time-and-a-half (if he/she makes $6 an hour, the overtime pay would be $9 an hour).   This company keeps its payroll records on a computer spreadsheet.  The taxes withheld from each paycheck is taken from current IRS Federal income and social security tax and Utah State income tax charts showing the correct amount to deduct.  The business has to make a quarterly (every three months) report showing the amount of taxes deducted for each person,  identifying each person by his/her social security number.   This report is filed (mailed to the I.R.S.) along with a check to cover the total tax deductions.  Some banks take the company's quarterly report and check to cover the taxes.  We use our local Bank here in our community.

A typical payroll check looks like a regular check and also has a "stub" attached showing the gross income, the taxes deducted, and the net pay.  An example of a paycheck is on the back of the sheet that you got from the folder.

To figure the pay check, since it was for a two week period, the employee had worked two 40-hour weeks which equals 80 hours.  This employee's hourly rate of pay is $7.50.  The $7.50 is multiplied by 80 which equals $600.00 for the gross earnings.   The F.I.C.A (Social Security) rate is figured by multiplying $600.00 by .062.   The Medicare tax rate is figured by multiplying $600 by .0145.  The Federal Withholding Tax is figured by using a table (get from teacher) and the Utah State Withholding Tax is figured by using a table (get from teacher).  You have to know whether the person is married or single and how many exemptions (deductions) she/he is allowed.  This exemption and tax status is determined by the Employee's W-4 form which is filled out the first day of employment.

A Payroll Journal is kept in a company to show all the figures for each pay period.   At the end of the quarter (every three months), the company has to add all of the F.I.C.A and the Federal Withholding taxes deducted from each employees check and make a quarterly report and deposit of these amounts.  the Utah State Withholding tax is done the same way, but sent to the State of Utah instead of the Federal Government.

A sample payroll journal is shown below:

Keeping the Payroll Journal on a Spreadsheet Program

When using a spreadsheet program, you will need to decide the general layout of your spreadsheet.  Use the information presented for the Company Payroll.  Design a spreadsheet using the following formulas and calculations within the spreadsheet.

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