Unit 30 - Stuck !

stevie_vee

Hey everyone, my first post on here
I am doing a home study AAT course, from scratch and have been progressing along really well.

However i have hit a brick wall. After grasping the double entry and dr and cr i then came across the Accounting for Payroll Payments in Chapter 13. Now i am really confused.

four lots of double entries to be made in three main accounts (gross wage, wages expense, PAYE/NIC creditor)

For some reason i cant get my head around this and just wanted to find out if anyone has any other resources on this topic where i can try and get a different perspective and hence a better understanding.

I could try and memorise this but i would of course prefer to try and understand it.

thanks for any help and advise you can offer.

Steve

crispy

If you can follow the logic of the following made up figures,

Gross Pay = £ 100, PAYE Tax £ 15, Employee NI £ 5, Employer NI £ 10
Net Pay = £ 80
Journals as follows: -

Dr Wages & NI Expense £ 100
Cr Wages Control A/c £ 100
Being Gross Wage

Dr Wages & NI Expense £ 10
Cr Wages Control £ 10
Being Employer's NI

Dr Wages Control £ 15
Cr PAYE/NI Liability £ 15
Being PAYE Income Tax

Dr Wages Control £ 15
Cr PAYE/NI Liability £ 15
Being Total NIC (Employers + Employee)

Dr Wages Control £ 80
Cr Bank £ 80
Being settlement of Net Wages

Posting the above should reconcile the Wages Control Account, and leave a credit balance of £ 30 on PAYE/NI Account - being the liabilitly owed to HMRC. In the Profit & Loss Account should be recorded the Gross Wage + Employers Ni - being the expense to the business.