Payroll Accounting

1.The following payroll summary is prepared for the Southern Manufacturing Company for the week
ending March 29, 2018:

Direct labor:
Job No. 200 P103,000
Job No. 201 70,000
Job No. 202 65,000
Total direct labor P238,000
Indirect labor 62,000
Total gross payroll P300,000

Payroll taxes and insurance are to be computed as follows:

Employee's Employer's
Share Share
Iincome tax withheld 10%
Pension Fund 2.0%
Pag-ibig Contribution 2.0% 2.0%
PhilHealth 1.25% 1.25%
SSS Contribution 2.5% 3.25%
Employee's compensation insurance 1.0%
Prepare the general journal entries to:

a. Record the payroll.

b. Pay the payroll.
c. Distribute the payroll to the appropriate accounts.
d. Record the employer's share of payroll expense. (All of the employees work in the
factory.)

2. Jay See is paid P100 an hour for 40 hours a week, with time-and-a-half for overtime and double-
time for Sundays and holidays. Overtime premium is charged to Factory Overhead.

Using the labor-time record below:

a. Compute Jay’s total earnings for the week.
b. Present the journal entry to distribute Jerrod’s total earnings.

Withholding -Tax 10%; SSS – 2%; Pag-ibig- 1%; Philheal-1%

Sun Mon Tues Wed Thur Fri Sat Total

J-F28 4 4 4 4 4 4 4 28
J-M14 3 2 4 6 15
Admin 1 2 4 7
Total 4 8 8 8 8 10 4 50
3. Bel Gran earns P45 per hour for up to 300 units of production per eight-hour day. If she produces
more than 300 pieces per day, she will receive an additional piece rate of P1.20 per unit.

A summary of her work week follows:

Hours Worked Pieces Finished

Monday 8 350
Tuesday 8 280
Wednesday 8 320
Thursday 8 290
Friday 8 300

(a) Determine Gran’s earnings for each day and for the week.
(b) Prepare the journal entry to distribute the payroll.

4. Trix Company’s Schedule of Earnings and Payroll taxes for the period ended March 28 - 31 to be paid
April 5 follow:

Total
Gross Wages SSS PhilHealth Pag-Ibig payroll
taxes
Non-factory:
Sales P750,000 P 22,500 P7,500 P15,000 P45,000
Administrative 400,000 12,000 4,000 8,000 24,000
1,150,000 34,500 11,500 23,000 69,000
Factory:
Direct labor 5,200,000 130,000 52,000 52,000 234,000
Overtime premium 450,000 13,500 4,500 4,500 22,500
Indirect labor 1,000,000 25,000 10,000 10,000 45,000
6,650,000 168,500 66,500 66,500 301,000
P7,800,000 P203,000 P78,000 P89,00 P370,005

Prepare the journal entries to:

(a) Accrue the payroll in the appropriate period
(b) Distribute the accrued payroll in the appropriate period
(c) Recognize related accrued employer’s payroll taxes in the appropriate period
assuming payroll taxes are spread over all jobs produced.