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Thread: Accounting for payroll

  1. #1
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    Accounting for payroll

    I wonder if one of the smarter people here can assist me with something regarding to how to best account for payroll.

    Here's the scenario. I pay a person as follows:

    Salary: R10000
    Commission: R21187

    Accordingly, the following will apply to this payment:
    PAYE: 6224.20
    UIF: 100 (1% of the salary only)
    SDL: 311.87

    Keeping the above in mind, the NET PAY = R24862.80

    My question relates to how I account for this from an accounting point of view? Assume I don't have an accounting package, but a big journal and a fountain tip pen, and I have to account for all of the above manually. Is there a good article anyone knows of, or is their a kind soul that could help me out.

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    Hi

    It really depends how much detail you want in your journal.

    But I would suggest the following:

    Dr Salary expense - R31,187
    Dr SDL expense - R311.87
    Dr UIF Employer expense - R100.00
    Cr Salary due (liability) - R24,862.80
    Cr SARS liability - R6,736.07

  3. #3
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    Quote Originally Posted by Heidivf View Post
    Hi

    It really depends how much detail you want in your journal.

    But I would suggest the following:

    Dr Salary expense - R31,187
    Dr SDL expense - R311.87
    Dr UIF Employer expense - R100.00
    Cr Salary due (liability) - R24,862.80
    Cr SARS liability - R6,736.07
    Thank you Heidi - I appreciate you taking the time out to respond.

    One question though. I do have 3 final questions I wonder if you can help me with:
    1. The SARS liability - is that the EMP201 payment?
    2. Once I pay the salaries to the employees, do I debit the Salary Due liability and credit my Bank account (assuming I'm paying out of the Bank account?
    3. Similarly, when I make my EMP201 payment, do I debit the SARS liability and credit my Bank account?

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    Hi MacGee, Heidi's answer is spot on, and so are you. "Yes" to all three questions.

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