Wages and Salaries Control Account

OrangeTop7

Hi
Someone's tried to answer my question, but didn't understand my question!, so I'll re-write it:

Does the employer's NI contribution sit on the dr or cr side of the Wages and Salaries Control Account or, strangely, both sides? I ask because my tutor has confused me by telling me it sits on both sides. Either that or I misunderstood her. Thanks

apl207

Hi

It does appear on both sides at different stages.

When the payroll is ran the liability is created - the entry would be:

DR Wages & salaries / Employer's NI (P&L)
CR Wages & salaries control / PAYE & NIC creditor (B/S)

And then when it is paid to HMRC it is then debited out again removing the liability

DR Wages & salaries control / PAYE & NIC creditor (B/S)
CR Bank (B/S)

The majority of the time at the year end it would sit on the credit as a liability and then it would paid post year end

Hope this helps

OrangeTop7

Thank you very much.

OrangeTop7

It still goes on the Wages Expense account a separate expense? Yes?

apl207

Yes it's a cost to the employer paying the NI so needs to be a wages expense on the profit & loss

No problem!

JayKallee

Emplyers NI and Pension contributions form part of 'employers cost' (ie Gross wage plus all employer contributions) This is Debited to Wages and Salaries account and credited to the Wages Control account.

Then you Debit Wages Control account with HMRC (all NI and Tax deducted) and credit HMRC account. You do the same with Net Pay, by debiting Wages Control and Credit Bank
You also debit Wages control with Pensions, Trade unions etc and credit Pension provider and Trade Union accounts.

After the postings, the control account should balance. The debit balance on Wages and Salaries will be posted to your Statement of Profit and loss account and individual credit balances on HMRC, Pension and Trade Unions are be liabilities that you will settle the following month.

Just do not confuse with money paid out or money coming in since at this stage no money exchange hand, look at them as expenses and liabilities

When they are settled they are debited and bank account credited.

To summarise, since the employers cost of wages is credited to the Wages control and the HMRC debited to the control, and both include employer NI, yes you may say they go on both side.

.

Hope this clarifies your query.

MichaelNorton

Easier to just show you the movements in a video

All students seem to hate this question because they go straight to doing the journals rather than doing a nice table first and then producing the journal and wages control account. It's an examiners trap so just to the steps with a table first.



Set this one to music for a laugh. I'll throw shade if you don't like it