Module I

Payroll Accounting

LEARNING OBJECTIVES

Careful study of this module should enable to learn, explain and understand the:

1. Payroll computation whether on a daily, semi monthly and/ or monthly basis.

2. Computation of Withholding taxes due, SSS premium due, Philhealth, and other deductions.
3. Recording of payroll and present them to the corresponding financial statements.
4. Implement the necessary internal control measures in payroll processing.

I. PAYROLL CONCEPTS

Payroll Accounting- is the process of computing and recording of disbursement for wages and salaries and their
related payroll deduction such as Withholding Taxes, mandatory contribution to the Social Security System,
PhilHealth, Pag-ibig of Home development Mutual Funds (HDMF), employees’ advances other allowable deductions.

Payroll administration starts with gathering individual employment requirements necessary such obtaining the
following:

1. Taxpayers Identification Number (TIN)(require submission of BIR form 2316 for those employees
transferring from a previous employer); (duly stamped by the BIR form no. 1902 for the new taxpayers of
form 2305 for employees who need to updates their personal exemptions)
2. SSS Number
3. Phil Health
4. Pag-ibig Number

These information are necessary when submitting quarterly/monthly contribution collection reports to SSS,
PhilHealth and HDMF. Recently, the Bureau of International Revenue has warned employers that the annual
Alphabetical Listing of Employees from whom taxes were withheld of ALPHALIST will no longer be accepted if this
includes some employees who does not have TIN yet.

II. PAYROLL

Every employer shall pay his employees by means of payroll where the following information and data shall be
individually shown:

1. Length of time to be paid

2. The rate of pay per month, week, day or hours, place etc;
3. The amount of the due for regular work;
4. The amount of due for the overtime work;
5. Deductions made from the wages of the employees; and
6. Amount actually paid.

Payroll is normally computed on the basis of the entries in their individual time records. Where employees are paid
on piece ,”pakiao”,”takay”, task, commission, or other non-time basis, the employer shall keep and maintain their
production records showing their daily output, gross earning, and actual number of working hours spent by the
employees on the job bearing the signature or thumb marks of the employees concerned.

Four Phases Payroll Accounting:

1. Computation of total gross for each employee

2. Determination of the deduction for each employee
3. Recording of gross earnings and deductions in the permanent payroll records.
4. Summarization of the total payroll activity base recording in the company’s general records
In general record, there are two categories of people working for the business –(1) the employees and (2) the
contractors

A worker is called an EMPLOYEE of the person or business that hired him (the employer) has direct total control of
the work job to be performed in which he is hired. The supervision of the employer does not only cover the control
over time, but also on materials/ supplies used in work, and the specific way of accomplishing the job.

On the other hand, a CONTRACTOR refers to an independent individual or in business hired by an enterprise to
perform in specific job for limited period. The task is detailed, but the means, and approach are left to the direction of
the independent contractor.

EMPLOYEE VERSUS CONTRACTOR

Example: Consider the security guards of a business could either get the service of an independent contractor (a
security agency) of hire its own employees to function as security guards.

If the business hired a security agency for ₱50,000 a month to guard the premises, the journal entry would be as
follows:

July 31 Security Expense 50,000.00

Cash 50,000.00

To record the payment for security service for the Month of July,2000

It could be inferred from the journal entry that if the business hires the service of an independent contractor, It does
not keep records for supplies ,manpower, equipment and other miscellaneous expenses in availing of the service
because these are the responsibility of the independent contractor.

On the other hand, if the employees of the business perform the security work, the recording would be very
different. The business needs to record not only the salaries of the security guards hired as employees but also on
their supplies and equipment used in securing the premises of the business. The business depreciates the
equipment used for security and maintains the records of each employees.

Salary is a fixed amount of compensation for service rendered covering a fixed period of time, usually a month. It
usually refers to the pay of managerial, administrative and rank and the file employees.

Wage is fixed amount of compensation for service rendered covering a fixed period of time, usually hours, or a fixed
amount or work usually by piece. It is usually a compensation given to skilled and unskilled labor.

Example: An employee is hired for ₱50 per hour and works 40 hours a week. His weekly gross earnings is ₱2,000,
(₱50x40). If an employee is hired for ₱100 for every piece of work and finished of five (5) pieces a day, then his wage
for a day is ₱500₱(₱100x5)

Bonus refers to the supplements pay given to employees to motivate the employees to work more efficiently and
effectively. This compensation is usually given in the form of midyear and year-end bonuses(14 th month,15th month
pay….etc)

ADDITION/DEDUCTIONS TO SALARIES

OVERTIME PAY (addition)

The Normal hours of any employee shall not exceed eight(8) hours a day.

Hours work shall include (a) all time during which an employee is required to be on duty or to be at a prescribed work
place , and (b) all time during which an employee is suffered or permitted to work.
In general, any employee who is required to work beyond eight(8) hours on ordinary working days shall be paid an
addition compensation for the overtime work in amount equivalent to his regular wage plus as least twenty-five
percent(25%)there of

The Labor Code of the Philippines provides for extra hours work of any employee. The extra hours worked shall be
given by computing the employee’s basic rate per hour plus a premium of twenty-five percent (25%)

Example: If an employee hired ₱50 per hour and he work for regular eight (8)hours plus six (6) hours overtime, the
computation of the days gross pay would be:

Basic (₱50x8) ₱400.00

Add: overtime basic (₱50x6) ₱300.00
Overtime premium
(₱500x6x25%) 75.00 375.00
Day’s Gross Pay ₱775.00
1. Night Shift Differential- An employee shall be paid night shift differential of no less than ten percent (10%)
of his regular wage for each hour of work performed between 10 o clock in the evening and six o’ clock in the
morning.( Sec. 2 rule labor code)
2. Addition compensation on Nights Shift Differential- when an employee is required of suffered to work on
period coverage after his work schedule, he shall be entitled to his regular wage plus at least twenty five
percent (25%) and an addition amount of no less than ten percent (10%) of such overtime rate for each hour
of work performed between 10p.m to 6p.m( Sec. 3. Rule II, Labor Code)

Example: Employee daily pay is₱275 and worked 8 hours on ordinary day plus 2 hours on night shift.
Basic wage ₱275.00
Add: overtime basic (₱275/8=₱34.38x2x25%) ₱85.95
Night Differential (₱85.95x10%) 8.60 94.55
Day‘s Gross Pay 369.55

3. Addition Compensation on scheduled rest day/special holiday- An employee who required or permitted to
work on the period covered during the rest day and/or special holiday not falling on regular holidays, shall be
paid a compensation equivalent to his regular wage plus at least thirty percent (30%) and additional amount
of not less than ten percent (10%) of such premium pay rate for each hour of work performed between 10
p.m to 6 a.m (Sec. 4 Rule II, Labor code)
Example: Employee daily pay is ₱275 and worked 8 hours on special day plus 1 hour on night shift.
Basic wage ₱275x1.30 ₱357.50
Add: overtime basic (₱357.50/8=₱44.469x130%) ₱58.10
Night Differential (₱58.10x10%) 5.81 63.91
Days Gross Pay ₱421.41
4. Addition compensation on schedule special holiday falling on employees rest day- An employee who required
or permitted to work on the period covered during special holiday falling on employees rest day, not falling
on regular holidays, shall be paid a compensation equivalent to his regular wage plus at least fifty percent
(50%) and an additional amount not less than ten percent (10%) of such premium pay rate for each hour of
work performed between 10 p.m to 6 a.m.(Sec. 4,m Rule II, Labor Code)
Example: Employee daily pay is₱275 and worked 8 hours on special holiday falling on his rest day plus 2 hours on
night shift.
Basic wage (₱275x150%) ₱412.50
Add: overtime basic ₱412.50/8x51.56x2x130%) ₱134.06
Night Differential (₱134.06x10%) 13.41 147.47
Day ‘s Gross Pay ₱559.97
HOLIDAY PAY (Addition)
1. Any employee is permitted or suffered to work on the scheduled rest day of the employee, he shall be paid
an additional compensation for the overtime work equivalent to his regular rest day for the 8 hours plus 30%
thereof. The regular holiday rest of an employee shall consist of 200% based on his regular wage rate.
 For work performed in excess of eight hours on regular holiday, an employee shall be paid an additional
compensation for the overtime work equivalent to his rate for the first eight hours on such holiday work plus 30%
thereof. (Rule II. Sec. 5 Labor Code)
Example: employee daily pay is ₱275 and worked 8 hours on regular holiday plus 1 hour on night shift.
Basic wage (₱275x200%) ₱550.00
Add: overtime basic ₱550/8=₱68.25x130%) ₱89.38
Night Differential (₱89.38x10%) 8.94 98.32
Day‘s Gross Pay ₱648.32

2. Any employee is permitted or suffered to work on the scheduled rest day of the employee, he shall be paid
an additional compensation for the overtime work equivalent to his regular rest day for the 8 hours plus 30%
thereof. The regular holiday day rate of an employee shall consist of 200% of his regular daily wage rate plus
30% thereof.

Basic wage (₱275x230%) ₱632.50

Add: overtime basic ₱632.50/8=₱79.06x130%x2 hours) ₱205.56
Night Differential (₱89.38x10%) 20.56 226.12
Day‘s Gross Pay ₱858.62
National Holidays

Holiday Date
 New Year’s Day January 1
 Maunday Thursday movable date
 Good Friday movable date
 Easter Saturday movable date
 Bataan Day April 9
 Labor day May 1
 Independence Day June 12
 National Heroes Day last Sunday of August
 Eid al-Fitr movable date/subject to the sighting of the new moon)
 All Saints Day November 1
 Bonifacio Day November 30
 Christmas Day December 25
 Rizal Day December 30

Tardiness/ undertime- these represent deductions from the salary which can be computed by multiplying the number
of minutes of hours late or under time by the hours rate. Computation varies per company policy.
OT Work in Regular Day 125% rate per hour
OT Work during rest day or special holiday 130% Rate per Hour
First 8 hours 130% Rate per Hour+30% of (130% of rate hour)
st
In excess of the 1 8 hours
OT Work on Special holiday falling on employee’s rest
day
First 8 hours 150%x rate per hour
In excess of the 1st 8 hours 150%x rate per jour+30% of (150% of rate/hour)

OT Work on Regular/Legal Holiday

First 8 hours 200%x rate per hour
In excess of the 1st 8 hours 200%x rate per jour+30% of (200% of rate/hour)
OT work on Rest day Falling on Regular Holiday
First 8 hours 260%x rate per hour
In excess of the 1st 8 hours 260%x rate per jour+30% of (260% of rate/hour)

Night-Shift Differential Pay Night-Shift employees must be paid a differential of not

less than 10% of the regular wage for each hour of work
performed between 10:00p.m and 6:00 a.m.

II. PAYROLL CALCULATION

FACTORS TO BE CONSIDERED IN COMPUTING THE GROSS EARNING OF AN EMPLOYEE.
1. Regular Pay
2. Overtime pay
3. Tardiness/ Undertime Deductions
4. LWOP(leave without pay)
5. Salary adjustments
6. Gross Pay

SUPPLEMENT WAGE
7. Vacation leave or Sick leave conversation on (company policies)

Vacation leave cash conversion is not taxable up to 10 days. In excess of 10 days only the number of days
exceeding 10 should be considered when computing compensation taxes. Sick leave conversion are all
taxable.

8. Mandatory 13th month pay and bonuses-these components are including determining the separation pay
of an outgoing employee for taxation purposes only the amount (after summing up 13 th month and
bonuses) exceeding ₱82,000.00 will be considered in computing income taxes.
DEDUCTION FROM GROSS PAY
A deduction from gross pay refers to the amount of money withheld from the employee’s pay. Generally, the
payment of employee’s earnings is subject to deduction with are:
1. Withhold income tax
2. SSS or GSIS premium
3. Phil Health premium
4. Pag-ibig or Home Development Mutual Fund (HDMF) contribution./
ADDITIONAL DEDUCTION
Vales are amount deducted from gross pay due to salary/ wage advance made by an employee
Union dues are the amount deducted from gross pay when the place of business has union to represent the
employees. The deduction may be based on the agreement between the union and the management to
deduct the union dues from the employee pay.

Pension fund-some employees provide at retirement / pension fund, and the employees contribute
additional funded they wish.

Charitable contribution-many employees allow charitable contribution to be made through payroll

deductions.
Credit union/cooperatives- if the business has a credit union, either savings or loans repayment can be made
through payroll deduction.

Upon duly informing the employees and depending on company policies, charges as follows could also be
deducted from the salaries:
1. Personalizing distance talk
2. Contribution for special activities or events advanced by the company
3. Payment for services availed or goods brought from the company
 WITHOLDING INCOME TAX
Section 578 of the National Internal Revenue Code (R.A. 8424) requires the employer to withhold portion of
salaries earned by employees that will at least approximate the income tax due of the earner relative to the
income earned.

The monthly (or semi-monthly) withholdings taxable could be obtained from the BIR to serve, as guide as to
what amount of tax is to be withheld from the salary of the employee.
In the absence of withholding tax table approximate amount of tax to be withheld could be calculate as
follows:
Example: An employee’s salary per month is ₱20,000. Assuming that he is married with two qualified dependents his
withholding income tax is computed as follows:
Monthly gross pay ₱20,000.00
Multiply by number of month in a year 12
Annual gross pay ₱240,000.00
Less personal Exemption (V50,00+₱50,000 100,000.00
Nat taxable Compensation ₱140,000.00
Estimated annual income tax per individual; income tax rate
See graduated income tax rates below-tax on ₱22,500.00
Estimated annual income tax ₱22,500.00
Divided by number of months in a year 12
Approximate monthly withholding tax ₱ 1,875.00
Graduated Income Tax Rates
Net over ₱10,000
Over ₱10,000 but not over ₱30,000 ₱500 + 10% of excess over ₱10,000
Over ₱30,000 but not over ₱20,000 ₱2,500+ 10% of excess over ₱10,000
Over ₱70,000 but not over ₱140,000 ₱8,500 + 10% of excess over ₱10,000
Over ₱140,000 but not over ₱250,000 ₱22,500+ 10% of excess over ₱10,000
Over ₱250,000 but not over ₱500,000 ₱50,000+ 10% of excess over ₱10,000
Over ₱500,000 ₱125,000+ 10% of excess over ₱10,000
Amount of Personal and Additional Exemptions:
1. ₱50,000 for single individual
2. ₱50,000 for each legally married individual
3. ₱25,000 for each of the qualified dependent children nor exceeding four (4) in number.
Note: the additional exemption refers to qualified dependent children such as legitimate recognized natural
illegitimate and legally adopted.
New exemption under RA 9504
Tax status Amount
S 50,000.00
S1 75,000.00
S2 100,000.00
S3 125,000.00
S4 150,000.00
ME 50,000.00
ME1 75,000.00
ME2 100,000.00
ME 3 125,000.00
ME4 150,000.00
The net income compensation payment to the employee with no other deduction would be ₱18,125.00 compute is
as follow:
Gross Pay ₱20,000.00
Less Withholding Income 1,875.00
Net pay ₱18,125.00
If the payment were on a semi-monthly basis withholding tax is normally deducted from the payroll for the second
half of the month.
 Gross Pay ₱10,000.00
Less Withholding Income 1,875.00
Net pay ₱ 8,125.00
PAYROLL CYCLE AND DEADLINES
1. Gathering of Payroll Data Such as
 Attendance records absences ,tardiness, undertime and leave without pa (LWOP)
 Salary adjustments data coming from the person –in-charge of post-payroll reviewing
 Information on changes an employment status, personal status (exemption & number of dependent)
that could affect the computation of the basic salary, contribution and withholding taxes.
2. Payroll Computation and recording in the individual Payroll
 Compute the total compensation or Gross Salary Earnings by summing up the following:
1. Basic Salary
2. Overtime Pay
3. Undertime /tardiness deduction
4. Absences in excess of leave credits (leave without pay)
5. Salary Adjustments
 Compute the total Deductions from Salary which should include the following:
1. SSS/GSIS contributions
2. Philhealth contributions
3. Pag-ibig Fund or HDMF contribution
4. Withholding Taxes
5. Other allowance deductions
3. Preparation of Entries to be recorded in the Books of Accounts
 To summarize the payroll
SALARIES EXPENSE
XXX
SSS PREMIUM CONTRIBUTION PAYABLE XXX
PHILHEALTH CONTRIBUTION PAYABLE XXX
PAG-IBIG CONTRIBUTION PAYABLE XXX
WITHHOLDING TAXES XXX
CASH XXX
 To record the employer’s share in the contributions
SSS PREMIUM EXPENSE XXX
PHILHEALTH PREMIUM EXPENSE XXX
PAG-IBIG PREMIUM EXPENSE XXX
SSS PREMIUM PAYABLE XXX
PHILHEALTH PREMIUM PAYABLE XXX
PAG-IBIG PREMIUM PAYABLE XXX
 To remit the contribution on due date

SSS PREMIUM PAYABLE XXX

PHILHEALTH PREMIUM PAYABLE XXX
PAG-IBIG CONTRIBUTION PREMIUM PAYABLE XXX
WITHHOLDING TAXES PAYABLE
CASH BANK XXX
4. Recording of payroll Data every after payday from January to November summarizing the following data
separate worksheet to facilitate preparation of the Alphabetical Listing of employees from whom Taxes were
withheld:
 Basic Pay (including all taxable salary adjustments)
 Total deduction Contributions(SSS,PhilHealth and Pag-ibig)
 Total taxes Withheld
5. Preparation of Remittance Schedules and Accomplishment of Payment Returns for each of the following
agencies of the government:
Forms to fill up Deadline of Payment
 SSS Contributions R-S if the 10th digit of the 13-digit of the ER number ends in:

1 or 2-10th day of the month

3 or 4-15th day of the month
5 or 6-20th day of the month
7 or 8-25th day of the month
9 or 0 last day of the month
Philhealth Contributions M1A 10th of the month
Pag-ibig Contribution Remittance form Due date depends on the first letter of the of the
Registered Name of the company
Taxes withheld 1601-C 10th of the month
6. Quarterly SSS and Philhealth require submission of Quarterly Collection lists for posting of an individual
contributions.
7. Annually the bureau of Internal Revenue requires submission of an Alphabetical lists of Employees from
whom taxes were withheld or ALPHALIST which is due to be submitted, usually on the last day of the month
following the calendar year (January 31). Please take note that prior to submission of this Return, the
employer is expected to have made the necessary adjustment as regards the taxes withheld.

DEDUCTABLE MEMBERSHIP FEE

Private employee who are not over 60 years old, whether permanent, temporary or provisional are subject to
compulsory coverage of SSS, Philhealth and Pag-ibig deductable membership contribution.
Please see attached tables
SOCIAL SECURITY SYSTEM
SSS CONTRIBUTION TABLE
Contribution Schedule Effective January 1,2014
PHILIPPINE HEALTH INSURANCE CORPORATION
PHILIPPINE CONTRIBUTION TABLE
Contribution Schedule Effective January 1, 2014

According to the PhilHealth circular Co. 27-2013, the salary bracket for the employed sectors shall be adjusted
starting January 2013 with the following considerations:
1. The premium rate shall be 2.5%
2. Salary bracket shall be used
3. Salary bracket floor shall start at ₱ 8,000.00
4. Salary bracket ceiling shall pegged ₱35,000.00
REVISED TRANSITORY WITHHOLDING TAX TABLES
Effective JANUARY 1, 2009

MONTHLY 1 2 3 4 5 6 7 8
Exemption 41.67 208.33 708.33 1875.00 4166.67 10,416.67
Status +0%over +5%over +10%over +15%over +20%ove +25%over +30%over +32%over
r
TABLE A
1. Z 1 833 2,500 5,833 11,667 20,833 42,667
2.S/ME 50,000 1 4167 5,000 6,667 10,000 15,833 25,000 45,833
TABLE B
1.ME1/S1 75,000 1 6,250 7,083 8,750 12,083 17,917 27,083 47,917
2.ME2/S2 100,000 1 8,333 9,167 10,833 14,167 20,000 29,167 50,000
3.ME3/S3 125,000 1 10,417 11,250 22,917 16,250 22,083 31,250 52,083
4.ME4/S4 150,000 1 12,500 13,333 15,000 18,333 24,167 33,333 54,167

Legend: Z-zero exemption S-Single ME –Married Employee 1….4 Number of Qualified dependent children
S/ME=₱ 50,000.00 EACH WORKIMG EMPLOYEE Qualified Dependent Child=₱25,000 each but not exceeding four(4) children
USE TABLE FOR EMPLOYEES WITH NO QUALIFIED DEPENDENT
1. Married Employee (Husband or Wife) whose spouse is unemployed.
2. Married Employee (Husband or Wife) whose spouse is a non-resident citizen receiving from foreign sources
3. Employed husband whose wife is engaged in business (husband claims exemptions for children)
4. Employed wife whose husband is engaged in business and has waived claim for dependent children in favor
pf the employee wife
5. Single
6. Zero Exemption for employee with the multiple employers for their and 3 rd employers(main employer claims
personal and additional exemption)
7. Zero Exemption for those who failed to file Certificate of exemption update

USE TABLE FOR EMPLOYYES WITH QUALIFIED DEPENDENT CHILDREN

1. Employed husband whose wife is also employed. Husband claims exemption of children
2. Employed wife whose husband is also employed and has waved claim for dependent children in favor of
employed wife
3. Single with qualified dependent children.

Problem 1

SSS Enterprises hired Ian Ray Pagaduan as an accounting Clerk. He accepted a monthly basic pay of ₱10,000. For the
first six months, it was a company policy that he will be under probationary employment status and such as will be
paid on a daily basis. No work no pay applies to him

Assuming that the company observes a 262 working days per year and Ian Rey works for 22 days for the month of
January 2007 with 18 hours of overtime rendered. Compute his salary net of all mandatory deductions Ian is single

Problem 2
ECC Corporation provided the following information to you for computation of withholding taxes on compensation.
Determine the taxes due A) in the absence of withholding tax table 20 using the monthly tax table.

Employee name Status Basic Overtime SSS PHIC HDMF SSS/HDMF

Pay/month
Casandra Belista Single 10,000.00 1,234.00 363.30 125.00 100.00 750.00
Noemi Lascona M1 14,000.00 5,678.00 508.70 175.00 100.00 750.00
 Ellaisa Madrid M3 12,000.00 2,345.00 436.00 150.00 100.00

Explain in which is more beneficial to both company and employees in relation to the preparation of payroll and the
annualization of compensation at year-end.

Problem 3
Prepare the 1.) payroll registers 2.) remittance schedule 3.) payment remittances (please use attached forms) for
cornerstone Inc. for the month of January 2014 using the payroll information below.

Company name; Cornerstone Inc.

Company address; 2502z Taktite east Tower, Exchanged Road, Ortigas, Pasig City
TIN: 185-003-465-000
PHIC: 20-047460145-3
SSS: 03-9118146-9

All employees are monthly rated except for Larry Enriquez, the messenger, who is paid at a rate per day, Larry
reported 19 days in January. Unauthorized absences and tardiness are deducted from payroll using 312 working days
per year. The company withholds all mandatory deductions and remits according to the different agencies.

Regular Unauthorized
OT Rest day Absence (No SSS/HDMF
Employee Name Status Monthly rate hours OT Pay Tardiness Loans
Casandra Belista S 10,000.00 10 hours 8 hours 1 day 45 minutes 350.00
Noemi Lascona M1 15,000.00 5 hours 8 hours 2 days 40 minutes 350.00
Ellaisa Madrid M3 12,000.00 24 hours 8 hours 4 hours 35 minutes 700.00
Larry Enriquez M ₱350 per day 15 hours
Problem 4
Case1
Jaime Legaspi is a marketing and research staff at the C7C Advertising Inc. and was hired on October 2013. He is
single and is receiving ₱ 15,000 per month. On april 1, 2014 he tendered his resignation with effect on April 30, 2014.
Given the following information, provide the final Pay computation for Jaime Legaspi and determine the following:
a. Net final Pay
b. Taxable income
c. Taxes Payable (Refund)

Earnings Gross Deductions

Basic OT Pay HDMF SSS SSS Loan PHIC W/Tax Net Pay
15 Jan 7,500.00 7,500.00 50.00 272.50 93.75 770.92 6,312.83
30 Jan 7,500.00 8,750.95 16,250.95 50.00 272.50 93.75 770.92 15,063.78
15 Feb 7,500.00 7,500.00 50.00 272.50 93.75 770.92 15,063.78
28 Feb 7,500.00 9,385.85 16,885.85 50.00 272.50 525.00 93.75 770.92 6,312.83
15Mar 7,500.00 7,500.00 50.00 272.50 262.50 93.75 770.92 15,173.68
31 Mar 7,500.00 8,760.26 16,260.26 50.00 272.50 262.50 93.75 770.92 6,050.33
15 Apr 7,500.00 7,500.00 50.00 272.50 262.50 93.75 770.92 14,810.59
30 Apr 7,500.00 7,500.00 50.00 272.50 262.50 93.75 770.92 6,050.33
60,000.00 26,897.06 86,897.06 400.00 2,180.00 1,575.00 750.00 6,617.36 75,824.70

Additional information
1. As of April 30,2014 unpaid cash advance is ₱3,500 to be deducted from the final pay.
2. Regular overtime for April is 96 hours C7C’s working days per year is 262 days and working hours of 8 per day.
Case 2

Amor de Jesus is also a research staff from C7C Advertising Inc. she is also receiving ₱15,000.00 per month and is still
single. She is tendered resignation effective on April 30, 2014. Opposite to Jaime Legaspi, her basic pay for the Month
of April was put on hold and will be released only after her resignation’s effectivity. The following are her payroll
register from January –April of the current year. Compute fon the final pay and determine the following:

a. Net Final Pay

b. Taxable Income
c. Taxes Payable (Refund)

Earnings Gross Deductions

Ba Pay HDMF SSS SSS Loan PHIC W/Tax Net Pay
15 Jan 7,500.00 7,500.00 50 272.50 93.75 958 6,125.75
30 Jan 7,500.00 7,500.00 50 272.50 93.75 635 6,448.75
15 Feb 7,500.00 7,500.00 50 272.50 93.75 645 6438.75
28 Feb 7,500.00 7,500.00 50 272.50 525 93.75 956 5,602.75
15 Mar 7,500.00 7,500.00 50 272.50 262 93.75 362 6,459.25
31 Mar 7,500.00 7,500.00 50 272.50 262 93.75 441 6,380.25
45,000.00 45,000.00 300.00 1,635.00 1,050.00 562.50 3,997.00 37,455.50

Case 3
Tricia works as an executive assistant of Cola Cola bottles,Inc. she receives the minimum rate of ₱350 per day for the
eight hour work. The following are the timekeeping summary for the cut off period from April 1-30,2014.

8:00 AM-5:00 PM 214 hours

5:00PM-10:00PM 46 hours
10:00PM-11:00PM 17 hours

The summary includes Tricia’s hours work on April 9, 2014

Additional Information
Employee Name: Tricia Bernardo E076
Status : Single
TIN : 123-456-789-000

Requirements:
1. Compute Tricia’s payroll for April
2. Determine the SSS,PHIC,HDMF and withholding tax dues for both employee and employer. Monthly
working for purpose of establishing salary bracket is 26 days
3. Provide the journal entries for the computation including the recognition/accrual of employer share in
the statutory deductions.
Case 4

Elena works as an accounting assistant of Cola Cola Bottle,Inc. She is being paid for a monthly rate of ₱15,000. The
following are the timekeeping summary for the cut-off period from April 1-30,2014
5:00 AM-10:00 PM 46 hours
10:00PM-11:00PM 17 hours
Lates/Undertime 3 hours
Elena enjoyed the holiday at home

Additional Information
Employee Name: Elena Cruz EO67
 Status : single
TIN : 456-789-000-000

Requirements:
1. Compute Elena’s payroll for April assuming that the company’s working days per year is 262.
2. Determine the SSS,PHIC,HDMF and withholding tax dues for both employee and employer
3. Provide the journal entries for the computation including the recognition/accrual of employer share in
the statutory deductions.

Case 5
Year end activities in payroll preparation include the annualization of salaries to determine the year end
adjustments. Company B would like to qualify in the substituted filling of income tax returns. To qualify, the tax due
of the employees must be equal to the amount of tax deducted and remitted by the employer.

1. 13th month pay, assume release rate is December 31, payroll

2. Taxes due for the year
3. Tax payable of refund to be included in December 31 payroll
4. Net pay for December 31, 2014

Summary 1 employee is Head of the family with (one) qualified dependent

Pay Employee Regular w/Tax SSS,PHIC Net Pay

Out Name HDMF cont
15- Jan Mica Cruz 7,500.00 308.00 416.25 6,775.75
30- Jan Mica Cruz 7,500.00 308.00 416.25 6,775.75
15- Jan Mica Cruz 7,500.00 308.00 416.25 6,775.75
15- Feb Mica Cruz 7,500.00 308.00 416.25 6,775.75
28- Feb Mica Cruz 7,500.00 308.00 416.25 6,775.75
15- Mar Mica Cruz 7,500.00 308.00 416.25 6,775.75
30-Mar Mica Cruz 7,500.00 308.00 416.25 6,775.75
15- Apr Mica Cruz 7,500.00 308.00 416.25 6,775.75
30-Apr Mica Cruz 7,500.00 308.00 416.25 6,775.75
15- May Mica Cruz 7,500.00 308.00 416.25 6,775.75
30-May Mica Cruz 7,500.00 308.00 416.25 6,775.75
15- Jun Mica Cruz 7,500.00 ?????? 416.25 ???????
82,500.00 3,080.00 4,572.75 67,757.50

Pay Employee Regular SSS w/Tax SSS,PHIC Net Pay

Out Name HDMF cont
15- Jan Angel Locsin 5,000.00 328.13 280.00 294.15 4,097.22
30- Jan Angel Locsin 5,000.00 328.13 280.00 294.15 4,097.22
15- Feb Angel Locsin 5,000.00 328.13 280.00 294.15 4,097.22
28- Feb Angel Locsin 5,000.00 328.13 280.00 294.15 4,097.22
15- Mar Angel Locsin 5,000.00 328.13 280.00 294.15 4,097.22
30- Mar Angel Locsin 5,000.00 328.13 280.00 294.15 4,097.22
15- Apr Angel Locsin 5,000.00 328.13 280.00 294.15 4,097.22
30- Apr Angel Locsin 5,000.00 328.13 280.00 294.15 4,097.22
15- May Angel Locsin 5,000.00 328.13 280.00 294.15 4,097.22
30-May Angel Locsin 5,000.00 328.13 280.00 294.15 4,097.22
15- Jun Angel Locsin 5,000.00 328.13 280.00 294.15 4,097.22
30- Jun Angel Locsin 5,000.00 328.13 280.00 294.15 4,097.22
15- Jul Angel Locsin 5,000.00 328.13 280.00 294.15 4,097.22
30- Jul Angel Locsin 5,000.00 328.13 280.00 294.15 4,097.22
15- Aug Angel Locsin 5,000.00 328.13 280.00 294.15 4,097.22
30- Aug Angel Locsin 5,000.00 328.13 280.00 294.15 4,097.22
15- Sep Angel Locsin 5,000.00 328.13 280.00 294.15 4,097.22
30- Sep Angel Locsin 5,000.00 328.13 280.00 294.15 4,097.22
15- Oct Angel Locsin 5,000.00 328.13 280.00 294.15 4,097.22
30- Oct Angel Locsin 5,000.00 328.13 280.00 294.15 4,097.22
15- Nov Angel Locsin 5,000.00 328.13 280.00 294.15 4,097.22
30-Nov Angel Locsin 5,000.00 328.13 280.00 294.15 4,097.22
15- Dec Angel Locsin 5,000.00 328.13 280.00 294.15 4,097.22
30- Dec Angel Locsin 5,000.00 328.13 ?????? 294.15 ???????
120,000.00 7,875.12 6,440.00 7,059.60 94,247.56
Summary 2 Employee