PAYROLL FUND,

BANK ACCOUNT AND

CONTROL OF CASH

Prepared by: Jenny A. Lo

Accounting for Non-Accountant
PAYROLL FUND
• The net payroll for employees is withdrawn from a
depository bank separate from other
disbursements.

• A separate checking account will be opened and

handled under imprest system and replenished
every after payroll.
Terminologies
Expenses
• SSS contribution
• PhilHealth contribution
• Pag-ibig contribution
Liabilities
• SSS Premium Payable
• PhilHealth Premium Payable
• Pag-ibig Premium Payable
• Withholding Tax Payable
• SSS Salary Loan
PAYROLL
• Salaries – remuneration given by the business
to its employees for their services
rendered.

• Payroll – prepared list of names of employees

showing their corresponding earnings or
salaries.

• Take home pay or Net payroll – the net amount

given to employees after some
deductions
PAYROLL
• Shows:
• Basic Salaries
• ECOLA (Emergency Cost of Living Allowance)
• 13TH month pay
• Bonuses

“SALARIES EXPENSE”
SSS Contributions
• R.A 1161 as amended that requires every employee or
laborer to be a member of SSS.

• In return of his monthly contributions an employee will

receive some benefits, such as, sickness, disability,
death, maternity, salary and educational loans, pension
benefits after retirement , burial expenses and etc.

• Contributions to the SSS are shared between employee

(monthly payroll) and his employer (business expense)
Employees Compensation Contribution (ECC)
• State insurance funding system, wherein an employee
is insured against injury/death sustained in connection
with his works.
Philippine Health Insurance Program (PhilHealth)
• To help Employees on their needs of financial assistance
whenever they are hospitalized or any of their immediate
dependents.

• They can avail of deduction from room and boarding

rates, medicine ,operating rooms, surgeon and
anesthesiologist’s fee and etc.
Pag-ibig Contribution
• It helps employees owned a home through
financing scheme.
• It also assured employees to get back the total
contributions which are composed of both
employee and employer’s share upon retirement
plus dividends.

• Equally shared between the employee and the

employer at a maximum amount of 200. The
employee can contribute more than the
maximum.
Withholding Tax Payable
• The Bureau of Internal Revenue (BIR) requires every
employer to deduct or withhold from his employees,
income taxes in accordance with the Withholding Tax
Payable.
Bank Accounts and Control of Cash
• Why Does Business Open Bank Accounts?
• Cash is an item that is susceptible to temptation of being subject to
fraud, theft and robbery.

• Keeping cash in vault within the premise of the business is very

risky.

- Savings Account
- Current or Checking Account
Savings Account
• Depositor is given a passbook or a bankbook by the
bank.

• The money deposited under Savings account normally

earns interest.
Current of Checking Account
• Depositor is required to accomplish a deposit slip
whenever deposit is made.

• The bank will provide the depositor with a checkbook.

• The money deposited under Current Account also earns

interest based on average daily balance.
Imprest System
• One way of safeguarding cash fund of a business is the
application of this method.

• All collections of the day are deposited intact on the next

day. No collection can be used in payment or whatsoever.

• All disbursement or payments are done thru a check.

Petty Cash Fund
• Used for payments of expenses involving small amounts.

• Example :
Transportation P20 pesos only
Supplies P50 pesos only

• It is very impractical , inconvenient and even costly to

issue check in small amounts expenses.
Mechanics in Handling The Petty Cash Fund
• Imprest Method - Under the imprest fund system, replenishment
of the fund is usually equal to the petty cash disbursements.
• Fluctuating Method - Under the fluctuating fund system,
replenishment of the fund may or may not be the same amount as
the petty cash disbursement.
Bank Statement
• Current or checking account is opened by the depositor, a
monthly statement is being sent by the bank to the
depositor showing the amounts of deposits , withdrawals,
bank charges if any and running amount balance,

• Usually sent 10 days after the end of each month.

Bank Reconciliation Statement
• It is produced when the book balance(Business) and the
Bank statement is not equal or will not tally with each
other.

• A discrepancy committed due to the bank error is

corrected by the bank itself and the depositor is in no
position to correct such error.
Reconciling Items
• Deposit in Transit – The deposit made by the depositor
which did not appear in the deposit column of the
bank statement.

• Outstanding Checks – Check issued by the depositor to

a supplier and same was not presented by the
said supplier to the bank for encashment or
payment within the month issue.
• Service Charge – Bank charges for services
• NSF Check – No sufficient fund or DAIF (Drawn against
Insufficient Fund)
3 Methods of Bank Reconciliation
• 1. Bank to Book Reconciliation
• 2. Book to Bank Reconciliation
• 3. Adjusted Method