Payroll

Question 1

What are some statutory deductions?

Answer 1

1. Income tax (PAYE)
2. NIC

Question 2

What are some non-statutory deductions?

Answer 2

1. pension contributions
2. GAYE
3. subscriptions eg. trade union

Question 3

What payments do we have to make to HMRC?

Answer 3

• tax from employees
• NIC from employees
• employers NIC

Question 4

What are the total costs to the employer?

Answer 4

-Gross pay
-ER’s NI
-ER’s pension contribution

Question 5

What is the first journal entry for payroll?

Answer 5

Dr Wages expense with gross pay, NI and pension
Cr Wages control with gross pay, NI and pension

Question 6

What is the second journal from wages control?

Answer 6

Dr WC - net pay
Dr WC - PAYE
Dr WC - EE’s NI
Dr WC - ER’s NI
Dr WC - EE’s pen
Dr WC - ER’s pen

Cr Bank - EE’s wages
Cr HMRC liability - PAYE
Cr HMRC liability - EE’s NI
Cr HMRC liability - ER’s NI
Cr Pension liability -EE’s pen
Cr Pension liability - ER’s pen

Question 7

What is the third journal to make payment for remaining liabilities?

Answer 7

Dr HMRC liability - PAYE
Dr HMRC liability - EE’s NI
Dr HMRC liability - ER’s NI
Dr Pension liability - EE’s pen
Dr Pension liability - ER’s pen

Cr Bank - PAYE
Cr Bank - EE’s NI
Cr Bank - ER’s NI
Cr Bank - EE’s pen
Cr Bank - ER’s pen