n4 accounting introductory - za.pearson.com...introductory n4 accounting school for small business...
TRANSCRIPT
Introductory Accounting N4
SCHOOL FOR SMALL BUSINESS MANAGEMENT CC
9781485717355_ntd_iac_n4_stb_eng_za.indb 19781485717355_ntd_iac_n4_stb_eng_za.indb 1 2020/05/22 18:202020/05/22 18:20
Pearson South Africa (Pty) Ltd
4th floor, Auto Atlantic Building,
Corner of Hertzog Boulevard and Heerengracht,
Cape Town, 8001
za.pearson.com
© Pearson South Africa (Pty) Ltd
All rights reserved. No part of this publication may be reproduced, stored in a retrieval system,
or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or
otherwise, without the prior written permission of the copyright holder.
Every effort has been made to trace the copyright holders of material produced in this title. We
would like to apologise for any infringement of copyright so caused, and copyright holders are
requested to contact the publishers in order to rectify the matter.
First published in 2020
ISBN 9781485717355 (print)
ISBN 9781485718529 (epdf)
Publisher: Amelia van Reenen
Managing editor: Ulla Schüler
Editor: Miranda Cilliers
Proofreader: Ingrid Brink
Book design: Pearson Media Hub
Cover design: Pearson Media Hub
Cover artwork: Andrus Ciprian. Shutterstock
Typesetting: Robin Yule
Printed by xxxx printers, [city]
Acknowledgements:
Text to follow
9781485717355_ntd_iac_n4_stb_eng_za.indb 29781485717355_ntd_iac_n4_stb_eng_za.indb 2 2020/05/22 18:202020/05/22 18:20
Contents
Introduction ..................................................................1Unit 1 Introductory remarks .......................................................................... 2
Module 1: Forms of ownership and wealth generation ....................................................................7Unit 1 Wealth generation .............................................................................. 8
Unit 2 Forms of business enterprises ........................................................... 15
Module 2: Opening a trading concern .....................25Unit 1 Opening a trading concern ............................................................... 26
Module 3: Documents and authorisation of transactions ............................................................33Unit 1 Documents and authorisation of documents .................................. 34
Module 4: Accounting principles and concepts .......53Unit 1 Accounting principles and concepts ................................................. 54
Module 5: Accounting entries of a trading concern ...65Unit 1 The double entry system ................................................................... 66
Unit 2 General Ledger entries ...................................................................... 69
Unit 3 Posting to the Ledger accounts ........................................................ 78
Module 6: Trading concerns: Subsidiary journals and posting to the Ledger .........................................85Unit 1 Cash Receipts Journal (CRJ) ............................................................... 87
Unit 2 Cash Payments Journal (CPJ) ............................................................. 96
Unit 3 Cash Analysis Book .......................................................................... 119
Unit 4 Petty Cash Journal ........................................................................... 107
9781485717355_ntd_iac_n4_stb_eng_za.indb 39781485717355_ntd_iac_n4_stb_eng_za.indb 3 2020/05/22 18:202020/05/22 18:20
Module 7: Wages and Salaries Journal ...................135Unit 1 Types of wage systems .................................................................... 136
Unit 2 Overtime remuneration .................................................................. 137
Unit 3 Deductions and contributions ........................................................ 139
Unit 4a Wages envelope .............................................................................. 143
Unit 4 Wages Journal ................................................................................. 126
Unit 5 Salary advice and Salaries Journal .................................................. 151
Unit 6 Recording wage and salary transactions in the CPJ ...................... 154
Unit 7 Posting wage and salary transactions to Ledger accounts (enrichment) .................................................................................... 158
Unit 8 Month-end procedures for some accounts (enrichment) ............. 164
Module 8: Bank Reconciliation ................................167Unit 1 Purpose of the Bank Reconciliation Statement ............................. 168
Unit 2 Purpose and functions of the Bank Statement ............................. 170
Unit 3 Discrepancies between the balances shown on the Bank Statement and in the Bank account ..................................... 171
Unit 4 Steps to reconcile the Bank Statement and the cash journals...... 173
Unit 5 Analyse the Bank Reconciliation Statement of the previous month and reflect errors ................................................................. 189
Unit 6 Stopping cheque payments ............................................................ 202
Unit 7 Post-dated cheques and bank reconciliation ................................. 203
Module 9: End of accounting period procedures ....209Unit 1 The Trial Balance.............................................................................. 210
Unit 2 Calculating profit ............................................................................ 220
Unit 3 The Statement of Financial Position (previously the Balance Sheet) ................................................................................. 230
Glossary .....................................................................236
9781485717355_ntd_iac_n4_stb_eng_za.indb 49781485717355_ntd_iac_n4_stb_eng_za.indb 4 2020/05/22 18:202020/05/22 18:20
135
Wages and Salaries Journal
What is covered?You have to be able to post wages and salaries transactions from the Wages and Salaries Journal to the Ledger.
Learning outcomes
After studying this module, you should be able to:
Unit 1■ Identify and briefly define the types of wage systems
Unit 2■ Describe the different ways to exercise control over overtime
and to calculate overtime remuneration
Unit 3■ Define the purpose of deductions from income (pension fund,
pay as you earn/PAYE, Unemployment Insurance Fund/UIF, medical aid, staff association) and determine the employee and employer’s share of the deductions
Unit 4■ Draw up wage envelopes■ Draw up a Wages Journal
Unit 5■ Draw up a Salaries Journal
Unit 6■ Record appropriate accounting entries regarding the wages
and Salaries Journals in the Cash Payments Journal (CPJ)
Unit 7■ Post to Ledger accounts
Unit 8■ Do month-end procedures with regard to salaries and wages
7Module
9781485717355_ntd_iac_n4_stb_eng_za.indb 1359781485717355_ntd_iac_n4_stb_eng_za.indb 135 2020/05/22 18:212020/05/22 18:21
136 Module 7: Wages and Salaries Journal
LEARNING OUTCOMES
■ Identify and briefly define the types of wage systems
IntroductionIt is important that any organisation or business keeps accurate records of wages and salaries paid. These records are needed by various stakeholders, including:
■ SARS to ensure that the correct levies and taxes are paid over
■ Department of Labour to determine if labour legislation requirements are adhered to
■ Medical fund to ensure that the employee and organisation pay the correct contributions
■ Pension fund to ensure that the employee and organisation pay the correct contributions
■ Employees to determine if wages and salaries are correctly calculated and paid.
1.1 Types of wage systemsThere are different types of wage systems. Wages can be paid per hour or per piece.
1.1.1 Hourly wage systemThe worker or employee receives a fixed hourly wage, regardless of his or her performance. The Department of Labour annually determines the wages for many sectors, such as for domestics and farm workers.
The wage formula in the hourly system is calculated as follows:
Fixed rate per hour × number of hours worked for the week
1.1.2 Piece wage systemEmployees or workers are paid for the amount of work or piece of work completed. Payment is made according to output which means that the person is paid more for being productive. For example, the person can be paid for number of sheep that were sheared or grape baskets picked for the day.
The piece wage formula is calculated as follows:
Rate per unit × number of units completed
NoteThe focus of this course is not on legalities as set out in the Basic Conditions of Employment Act (No. 75 of 1997).
You only need to know about the accounting aspects of remuneration.
Unit 1: Types of wage systems
9781485717355_ntd_iac_n4_stb_eng_za.indb 1369781485717355_ntd_iac_n4_stb_eng_za.indb 136 2020/05/22 18:212020/05/22 18:21
137 Unit 2: Overtime remuneration
Mo
du
le 7
LEARNING OUTCOMES
■ Describe the different ways to exercise control over overtime and to calculate overtime remuneration
IntroductionWorkers can receive overtime remuneration when they work more hours than the normal working hours agreed to or stipulated in their employment contract. If workers are going to work overtime, their contracts have to specify what the agreement is between the employer and the worker with respect to overtime.
2.1 Recording overtimeIt is necessary to know about some aspects legal aspects governing overtime as you, as an accountant, will have to record and sometimes calculate wages, salaries and other amounts related to income in accounting documents.
Organisations use various ways to record the number of hours that workers work overtime so that overtime remuneration cannot be abused and also as a means of protecting workers from exploitation.
The clock card system is commonly used. Each worker has his or her own clock card. The worker places the clock card into the clock card machine, which captures the starting time (clock in) and closing time (clock out).
It is dishonest to clock in or out on behalf of another worker who is late, leaves early or is absent. These are grounds for a disciplinary hearing and eventual dismissal.
2.2 Normal working hours and overtime workThe Basic Conditions of Employment Act (No. 75 of 1997) regulates the number of hours for which employees are allowed to work overtime. Employees are not allowed to work overtime for more than 10 hours per week.
The Basic Conditions of Employment Act also states that a person may not work more than 45 hours per week as normal time. This implies that someone working five days a week will work nine hours a day. If an employee is required to work more than 45 hours per week, the employee is entitled to overtime remuneration. However, no employee may be required to work overtime or may be allowed to work overtime if there is no prior agreement about how the employee will be remunerated or rewarded for overtime work.
An organisation or business may reduce normal working hours to 40 hours per week. If the employment contract states that the employee will work 40 hours and
Figure 7.1 A clock card machine
Unit 2: Overtime remuneration
9781485717355_ntd_iac_n4_stb_eng_za.indb 1379781485717355_ntd_iac_n4_stb_eng_za.indb 137 2020/05/22 18:212020/05/22 18:21
138 Module 7: Wages and Salaries Journal
five days a week, the employee will work eight hours per day. When the employee works more than 40 hours for the week, the employee will be entitled to overtime remuneration.
2.3 Calculating remuneration for overtimeThe law prescribes that overtime is calculated as one-and-a-half times the normal hourly rate.
People earning more than the threshold amount of R205 433.30 per year are excluded from the Basic Conditions of Employment Act regarding requirements of maximum work hours.
This implies that they are not allowed to overtime remuneration and may work more than 45 hours per week. The Department of Labour increases this threshold amount regularly.
9781485717355_ntd_iac_n4_stb_eng_za.indb 1389781485717355_ntd_iac_n4_stb_eng_za.indb 138 2020/05/22 18:212020/05/22 18:21
139 Unit 3: Deductions and contributions
Mo
du
le 7
LEARNING OUTCOMES
■ Define the purpose of deductions from income (pension fund, pay as you earn/PAYE, Unemployment Insurance Fund/UIF, medical aid, staff association) and determine the employee and employer’s share of the deductions
IntroductionVarious monies are deducted from an employee’s wage or salary for specific purposes, such as medical aid, pension fund, UIF and income tax. These monies are known as employee deductions or employee contributions.
Many employers make an additional contribution to some of these funds or schemes. In this way, the employee receives improved benefits. Monies added in this way are known as employer contributions.
3.1 Pension fundEveryone wants to have the prospect of enjoying their retirement. For this reason employees contribute to a pension fund. Permanent employees contribute a fixed percentage of the basic wage or salary (overtime payments are excluded) for pension purposes. Many employers also contribute a fixed percentage to improve the pension benefits of their staff. These monies are paid over to the pension fund on a monthly basis.
The pension formula is calculated as:
Normal time wage or salary × Pension contribution percentage
WORKED EXAMPLE Pension deduction calculations
Mr John Petersen earns a basic wage of R1 500 per week as a petrol attendant. He contributes 7.5% to the pension fund.
What amount of pension is deducted from his weekly wages?
SolutionPension deduction = Basic wage x Pension contribution percentage = R1 500 x 7.5% = R112.50
Keywordbasic wage the amount a person earns before additional payments such as overtime are added
Unit 3: Deductions and contributions
9781485717355_ntd_iac_n4_stb_eng_za.indb 1399781485717355_ntd_iac_n4_stb_eng_za.indb 139 2020/05/22 18:212020/05/22 18:21
140 Module 7: Wages and Salaries Journal
Exam preparationThe question in the exam may focus on employer contributions, such as:• UIF on a rand-for-rand basis, that is, the employer pay rand for rand the same as the
employee• the medical aid contribution which, is R1.50 for every R1 contributed by the employee• the pension fund, which is R2 for every R1 contributed by the employee.
You will then have to work out how much the employer contribution is.
WORKED EXAMPLE Employer contribution calculations
The employer of a worker contributes 5% to the worker’s pension fund.1. How much does the employer contribute?2. What is the total contribution to the worker’s pension fund?
SolutionEmployer contribution to pension = Normal time salary × Pension contribution percentage = R1 500 × 5% = R75.00
Total contribution to pension fund = Employee’s share + Employer’s share = R112.50 + R75.00 = 187.50
3.2 Pay as you earn (PAYE) or income taxEveryone who earns more than a certain amount must pay income tax. Your taxable income is your income after your pension contribution has been deducted from your salary.
Income tax is calculated on a sliding scale, i.e. the more you earn, the higher the percentage for income tax an employee needs to pay. For this reason our tax system is also known as a progressive tax system, meaning the higher your income the more tax you must pay.
It is the duty or responsibility of the employee to ensure that the employer deducts income tax from his/her salary or wage.
The duty of the employer is to deduct the correct amount of income tax and to pay it every month over to SARS.
Employees, like in most other countries, pay tax on what they earn. This is known as pay as you earn or PAYE.
PAYE is calculated as follows:
PAYE = Taxable income × Income tax percentage
OR
PAYE = (Wage or salary – Pension contribution of employee) × Income tax percentage
Keywordtaxable income an employee’s income after the employee’s pension contribution has been deducted
NoteIn 2001 South Africa changed from a source-based to an income tax system based on place of residence. Residents are taxed on their worldwide taxable income, irrespective from which country the income was earned.
9781485717355_ntd_iac_n4_stb_eng_za.indb 1409781485717355_ntd_iac_n4_stb_eng_za.indb 140 2020/05/22 18:212020/05/22 18:21
141 Unit 3: Deductions and contributions
Mo
du
le 7
WORKED EXAMPLE PAYE Calculations
Mr John Petersen earns a basic wage of R1 500 per week as a petrol attendant. He contributes 7.5% to the pension fund and his income tax percentage is 10%. How much is Mr Petersen’s weekly PAYE?
SolutionPAYE = (Wage or salary – Pension contribution of employee) x Income tax percentage = (R1 500 – R112.50) × 10% = R1 387.50 × 10% = R138.75
3.3 Unemployment Insurance Fund (UIF)In South Africa, every employee contributes 1% of their gross wage or gross salary towards the Unemployment Insurance Fund (UIF). When an employee becomes unemployed, the employee can apply to the Department of Labour to draw unemployment benefits.
In addition to the worker or employee contribution to the UIF, every employer must contribute an amount to the value of 1% of the gross salary of each worker or employee towards the UIF. The employer must pay over this combined 2% (deduction from salary plus the employer’s contribution) to SARS before the seventh of every month.
The UIF deduction from the employee’s salary is calculated as follows:
UIF wage or salary deduction = Normal time wage or salary × 1%
WORKED EXAMPLE UIF deduction calculations
Mr John Petersen earns a basic wage of R1 500 per week as a petrol attendant.1. How much is Mr Petersen’s UIF deduction from his weekly wage?2. How much is the UIF contribution that is paid over to SARS per month.
Solution1. UIF wage deduction = Normal time wage × 1%
= R1 500 × 1% = R15.00
2. The employer also has to pay R15.00 per week towards the monthly UIF contribution for Mr Petersen. Because there are four weeks in a month, the contribution equals 4 × R30 = R1 200.
NoteWhen a worker does not work overtime, the basic salary equals the gross salary for that worker.
Keywordgross wage (gross salary) the total earnings before deductions of a worker or employee
NoteIrrespective how much an employee earns, there is a maximum UIF deduction. For 2020, this has been fixed at to R148.72 per month or R37.18 per week.
This is based on a monthly threshold salary of R14 872. These amounts are revised by the Department of Labour regularly.
NoteThe Unemployment Insurance Act and Unemployment Insurance Contributions Act do not apply to:• public servants• learners or students• fixed term contract
workers from countries other than South Africa.
9781485717355_ntd_iac_n4_stb_eng_za.indb 1419781485717355_ntd_iac_n4_stb_eng_za.indb 141 2020/05/22 18:212020/05/22 18:21
142 Module 7: Wages and Salaries Journal
3.4 Medical aidA medical aid gives financial help to employees when they or their families need medical attention. The employee will be the main member and the family of the employee will be the dependants.
3.4.1 Worker or employee contributionThe employee usually pays a monthly contribution in arrears based on the number of dependants and the employee’s basic salary. Employers often also contribute towards employees’ medical aid fees.
WORKED EXAMPLE Mr John Petersen’s medical aid contribution
Mr John Petersen’s weekly wages as petrol attendant amount to R1 500. He is married with two children.His medical aid contribution per week works out as follows:
■ R150 per week for the main member ■ R100 for a spouse ■ R75 per child
Work out the medical aid deduction from Mr Petersen’s weekly wages.
SolutionR150 + R100 + (R75 × 2) = R400 per week
3.4.2 Employer medical contributionsAn employer’s contribution is on a rand-for-rand basis when the employer contributes the same amount as the employee’s deduction. If any employee contributes R25, the employer also contributes R25.
If the contribution of an employer is on a R2-for-every-R1 basis, it means that the employer contributes double the amount as the employee deduction. If an employee contributes R400, the employer contributes R800.
3.5 Staff associationEmployees may also contribute to a staff association or trade union. This amount will be deducted from their wages or salaries. The entity (for example, a government department or a mine) will pay these amounts over to the association. In this way staff association deductions are paid over regularly and on time to the staff association.
Keywordsrand-for-rand basis when an employer’s contribution for the employee is the same as that of the employee
R2-for-every-R1 basis when an employer’s contribution for the employee is double the employee’s contribution
9781485717355_ntd_iac_n4_stb_eng_za.indb 1429781485717355_ntd_iac_n4_stb_eng_za.indb 142 2020/05/22 18:212020/05/22 18:21
143 Unit 4a: Wage envelope
Mo
du
le 7
LEARNING OUTCOMES
■ Draw up wage envelopes
IntroductionUsually, employees that are paid weekly receive their wages in a specially printed wage envelope. The employer or manager will complete information on the envelope with regard to the wages, deductions and so on.
4a.1 Information on wage envelopeThe wage envelope usually indicates the following items:
■ Deductions (regular amounts subtracted from earnings) ■ Earnings (earnings before deductions) ■ Tariff (hourly rate at which wages are worked out) ■ Net wage (remuneration after deductions).
NoteThe Basic Conditions of Employment Act (No. 75 of 1997) stipulates that an employer must give employees a wage slip (wage envelope) or salary advice slip indicating income and deductions with every wage or salary paid.
WAGE ENVELOPEName: Ms Tiveka Masingi Age: 34Week ended: 23/11/2019 Employee No.: F357
Deductions R Earnings Tariff Hours R
Medical Fund R430.00 Normal time R40.00 40 hrs R1 600.00Pension Fund R120.00 Overtime R60.00 5 hrs R300.00PAYE R173.00 Total earnings R1 900.00UIF R16.00 Less: Total deductions R739.00Total deductions R739.00 Net wage R1 161.00
Figure 7.2 An example of a wage envelope
NoteFor the wage envelope, you only need to complete calculations for employee deductions and not for employer contributions.
Keywordnet wage a worker’s wage after deductions have been made
Unit 4a: Wage envelope
9781485717355_ntd_iac_n4_stb_eng_za.indb 1439781485717355_ntd_iac_n4_stb_eng_za.indb 143 2020/05/22 18:212020/05/22 18:21
144 Module 7: Wages and Salaries Journal
ACTIVITY 7.1 Complete Mr Khumalo’s wage envelope FORMATIVE ASSESSMENT
Mr Peter Khumalo works for Chicken Ranch. He and his wife have three children. The normal hours are 45 hours for the week. He worked 7 hours overtime.
UIF amounts to 1% of the normal time wage, while the pension is 6.5% of normal time wage. His PAYE is 15% of gross wage after pension has been deducted, that is, on taxable income. His medical deductions are R100 for the main member and R75 for each dependant.
Complete the wage envelope for Mr Khumalo.Round off to the nearest cent.
WAGE ENVELOPEName: Mr Peter Khumalo Age: 43Week ended: 19/10/2019 Employee No.: CR23
Deductions R Earnings Tariff Hours R
Medical Fund Normal time R32.00Pension Fund Overtime R48.00PAYE Total earnings
UIF Less: Total deductions
Total deductions Net wage
ACTIVITY 7.2 Complete wage envelopes for Mussel Trading’s workers FORMATIVE ASSESSMENT
Use the information you are given to complete the wage envelopes for the week ended on 21 March 2020 of Mussel Trading’s employees John Stevens (aged 46; Employee no. JOH 08) and Peter Steward (aged 33; Employee no. PET 02).All calculations must be rounded off to the nearest rand.
InformationThe normal hours are 45 hours for a week consisting of 6 days. Mondays to Fridays 8 hours per day and Saturdays 5 hours.
John Stevens worked 8.5 hours on Monday, 8 hours on Tuesday, 8 hours on Wednesday, × 11 hours on Thursday and 7.5 hours on Friday. He arranged with his supervisor to use the extra half hour he worked on Monday to make-up for normal time on Friday and to attend his father’s funeral on Saturday.
■ Earnings for the week: R20 per hour for normal time, and R30 per hour for overtime.
Peter Steward worked 8 hours on Monday, 9 hours on Tuesday, 10 hours on Wednesday, 9 hours on Thursday and 8 hours on Friday. He participated in an unprotected strike on Saturday.
■ Earnings for the week: R22 per hour for normal time, and R33 per hour for overtime.
9781485717355_ntd_iac_n4_stb_eng_za.indb 1449781485717355_ntd_iac_n4_stb_eng_za.indb 144 2020/05/22 18:212020/05/22 18:21
145 Unit 4a: Wage envelope
Mo
du
le 7
Deductions for John Stevens and Peter Steward:
EMPLOYEE DEPENDANTS MEDICAL FUND PENSION FUND PAYE UIF
John Stevens 2 R100 for the member and R40 for each dependant
7.5% of normal wage
22.5% of gross wage after pension has been taken into account
1% of normal wage
Peter Steward 3
Complete the wage envelopes for these two workers by making use of this template.
WAGE ENVELOPEName: Age: 43Week ended: Employee No.:
Deductions R Earnings Tariff Hours R
Medical Fund Normal time
Pension Fund Overtime
PAYE Total earnings
UIF Less: Total deductions
Total deductions Net wage
9781485717355_ntd_iac_n4_stb_eng_za.indb 1459781485717355_ntd_iac_n4_stb_eng_za.indb 145 2020/05/22 18:212020/05/22 18:21
146 Module 7: Wages and Salaries Journal
LEARNING OUTCOMES
■ Draw up a Wages Journal
Exam preparationClear instructions will be given in the exam as to rounding off of calculations, either to round off to the nearest rand or to the nearest cent.
IntroductionAll the information regarding the remuneration of weekly paid workers is recorded in a wage register or Wages Journal. This information will include all contributions of the worker as well as deductions from the gross wages. It will also include cost to company, that is, the total cost of the employee to the company (basic wage or salary, overtime pay, benefits and employer contributions).
4.1 The format of a Wages JournalThe Wages Journal includes the same kind of information as reflected on a wage envelope.
Keywordcost to company the total cost of an employee to a business, organisation or government
Unit 4: Wages Journal
CASE STUDY The Wages Journal reflecting Mr Khumalo’s wage details
The information of Mr Peter Khumalo (for whom you have drawn up a wage slip) has been recorded in the Wages Journal of the business for which he works.
A Wages Journal is usually in a landscape format, but we break it up here into manageable sections.
Wages Journal for the week ended 15 March 2020 WJ3
Employees
Normal time Overtime Gross wageTariff Hours Amount Tariff Hours Amount
P Khumalo R32.00 45 R1 440.00 R48.00 7 R336.00 R1 776.00
Wages Journal for the week ended 15 March 2020 (continued) WJ3
Employees’ deductions NetWage
Employer’s contributions
Pension Medical PAYE UIF Union Total Pension Medical UIF Total
R93.60 R400 R252.36 R14.40 R10 R760.36 R1 015.64 R141.40 R800.00 R14.40 R954.40
9781485717355_ntd_iac_n4_stb_eng_za.indb 1469781485717355_ntd_iac_n4_stb_eng_za.indb 146 2020/05/22 18:212020/05/22 18:21
147 Unit 4: Wages Journal
Mo
du
le 7
The employer of Mr Khumalo makes the following contributions: ■ UIF: rand-for-rand basis ■ Pension: R1.50 for every rand of employee contribution ■ Medical aid: R2.00 for every rand of employee contribution
Do you agree with the following statements? ■ Mr Peter Khumalo has a basic wage of R1 440.00 per week (45 hours). ■ He has a gross wage of R1 776.00 for this week (45 + 7 hours), i.e. before deductions. ■ He has a net wage of R1 015.64 for this week, i.e. after deductions. ■ Mr Khumalo’s cost to company for this week equals:
Gross wage + Employer contributions = R1 776.00 + R954.80 = R2 730.80
Exam preparationIn the exam, you will either have a question on completing the wage envelope or Wages Journal, usually not both. In the wage envelope, you only need to complete calculations for employee deductions/contributions. In the Wages Journal you need to complete calculations for both the employee and employer contributions.
CASE STUDY Different working hour scenarios inside Ubuntu Farming Project
Employees of Ubuntu Farming Projects work 45 hours over a 6-day week as follows: Monday to Fridays 8 hours per day and Saturdays 5 hours per day.
Let us look at different working hour situations for the week ended on 8 April 2017.
Maria Tapane worked on Monday 8 hours, Tuesday 8 hours, Wednesday 8 hours, Thursday 8 hours, Friday 8 hours and Saturday 5 hours.
Do you agree that Maria Tapane worked no overtime, only the regular 45-hour week?
Thabitha Raseroka worked as follows: on Monday 9 hours, Tuesday 9 hours, Wednesday 10 hours, Thursday 11 hours, Friday 9 hours and Saturday 6 hours. The overtime for the week amounts to:
Thabitha Raseroka
Day Total Normal Overtime
Monday 9 8 1
Tuesday 9 8 1
Wednesday 10 8 2
Thursday 11 8 3
Friday 9 8 1
Saturday 6 5 1
Total 54 45 9
9781485717355_ntd_iac_n4_stb_eng_za.indb 1479781485717355_ntd_iac_n4_stb_eng_za.indb 147 2020/05/22 18:212020/05/22 18:21
148 Module 7: Wages and Salaries Journal
Thabo Madubje worked as follows: on Monday 9 hours, Tuesday 9 hours, Wednesday 10 hours, Friday 9 hours and Saturday 6 hours. On Thursday he was absent, phoned in and brought a medical certificate the next day.
The regular hours and overtime for the week amount to:
Thabo Madubje
Day Total Normal Overtime
Monday 9 8 1
Tuesday 9 8 1
Wednesday 10 8 2
Thursday 0 8 0
Friday 9 8 1
Saturday 6 5 1
Total 43 45 6
Lionel Ntombela worked as follows: on Monday 9 hours, Tuesday 9 hours, Wednesday 10 hours, Friday 9 hours and Saturday 6 hours.
On Thursday he stayed away with no valid reason and without notifying his employer. The regular hours and overtime for the week amount to:
Lionel Ntombela
Day Total Normal Overtime
Monday 9 8 1
Tuesday 9 8 1
Wednesday 10 8 2
Thursday 0 0 0
Friday 9 8 1
Saturday 6 5 1
Total 43 37 6
What is the difference between the hours worked by Mr Madubje and Mr Ntombela?
NoteWhen an employee was ill, in hospital or attended a court hearing, that is, had a valid reason for being absent from work (usually documentary proof is needed), full payment is due as if the employee was at work.
NoteNo working hours will be recorded when an employee merely stays away (with no valid reason, especially not even phoning in).
This means that the employee forfeits the pay for that day. The principle of “no work, no pay” is applied in these instances.
9781485717355_ntd_iac_n4_stb_eng_za.indb 1489781485717355_ntd_iac_n4_stb_eng_za.indb 148 2020/05/22 18:212020/05/22 18:21
149 Unit 4: Wages Journal
Mo
du
le 7
Thandi Yaso worked as follows: on Monday 12 hours, Tuesday 8 hours, Wednesday 10 hours, Thursday 2, Friday 8 hours and Saturday 6 hours. She arranged with the Human Resources (HR) Manager to take off the overtime worked on Monday on Thursday, instead of getting paid for it.
Thandi Yaso
Day Total Normal Overtime
Monday 12 8 4
Tuesday 8 8 0
Wednesday 10 8 2
Thursday 2 + 6 8 0
Friday 8 8 0
Saturday 6 5 1
Total 46 45 3
Remember4 hours overtime = 6 hours normal time
ACTIVITY 7.3 Complete a Wages Journal for Ubuntu Farming Projects FORMATIVE ASSESSMENT
The case study above focused on Mary Tapane, Thabitha Raseroka, Thabo Madubje, Lionel Ntombela and Thandi Yaso who all work for Ubuntu Farming Projects. You have seen that their normal hours are 45 hours per 6-day week. The case study also shows their working hours for the week ended on 22 March 2020.
Complete the Wages Journal for this week, rounding off amounts to the nearest rand, if you are also given the following information about:
■ the workers’ contributions: ■ UIF: 1% of the basic or normal time wage ■ Pension: 5% of normal or basic wage ■ PAYE: 12% of gross wage after pension has been deducted (12% of taxable income) ■ Medical deductions: already entered
■ the employer’s contribution: ■ UIF: on a rand-for-rand basis compared to the employee’s contribution ■ Pension: R1.50 for every rand of the employee’s contribution ■ Medical aid: R2.00 for every rand of the employee contribution.
9781485717355_ntd_iac_n4_stb_eng_za.indb 1499781485717355_ntd_iac_n4_stb_eng_za.indb 149 2020/05/22 18:212020/05/22 18:21
150 Module 7: Wages and Salaries Journal
Wages Journal for the week ended 22 March 2020 WJ3
Employees
Normal time Overtime Gross wageTariff Hours Amount Tariff Hours Amount
Ms M Tapane R48 R48.00
Ms T Raseroka R44
Mr T Madubje R44
Mr L Ntombela R40
Ms Thandi Yaso R42
Wages Journal for the week ended 22 March 2020 (continued) WJ3
Employees’ deductions NetWage
Employer’s contributions
Pension Medical PAYE UIF Union Total Pension Medical UIF Total
R300
R400
R450
R500
R400
9781485717355_ntd_iac_n4_stb_eng_za.indb 1509781485717355_ntd_iac_n4_stb_eng_za.indb 150 2020/05/22 18:212020/05/22 18:21
151 Unit 5: Salary advice and Salaries Journal
Mo
du
le 7
LEARNING OUTCOMES
■ Draw up a Salaries Journal
IntroductionIf you understood how to complete the wage envelope and Wages Journal, you will also be able to do salary advices and Salaries Journal.
A salary advice has the same function as a wage envelope. It also contains similar information about the remuneration and deductions of the monthly paid employee.
5.1 Completing a Salaries JournalBusinesses and government departments issue hundreds of thousands of salary advices every month to their staff receiving a monthly salary. These large organisations use computerised systems (for example Pastel or VIP) to automatically complete the information needed for salary advices and the Salaries Journal.
The basic format of a Salaries Journal is as follows:
Salaries Journal for the month of April 2020 SJ4
Name of Employee
Gross Salary
Employee deductions
NetSalary
Employer contributions
Pension Medical PAYE UIF
Staff Assoc-iation Total Pension Medical UIF Total
Total
Figure 7.3 The format of a Salaries Journal
Exam preparationThe salary advice and Salaries Journal are less work than their wage counterparts, since there are usually no overtime calculations involved. For this reason, the examiner often asks you to complete the wage envelope or Wages Journal as these test if you can do the overtime calculations too.
The following activity is best done in groups as it is more complicated than the usual exam questions.
Unit 5: Salary advice and Salaries Journal
9781485717355_ntd_iac_n4_stb_eng_za.indb 1519781485717355_ntd_iac_n4_stb_eng_za.indb 151 2020/05/22 18:212020/05/22 18:21
152 Module 7: Wages and Salaries Journal
ACTIVITY 7.5 Complete a Salaries Journal for Mother City Printers FORMATIVE ASSESSMENT
Lerato Gcaza, Vusi Tembo, Mogamat Langeveldt and Olivia Miza are paid monthly by their employer, Mother City Printers.
Use the employee details and the staff policy to complete the Salaries Journal for May 2020.
Round off to the nearest rand.
Employee details: ■ Ms L Gcaza (aged 34), a single mother with 2 school going children, has a gross
salary of R16 000 p.m. ■ Mr V Tembo (aged 23) is single with no dependants and has a gross salary of
R12 000 p.m. ■ Mr M Langeveldt (aged 46) is married and has 3 young children. His gross salary is
R28 000 p.m. ■ Ms O Miza (aged 30) is recently divorced and has one school going child. Her gross
salary is R21 000 p.m.
Monthly deductions: ■ Pension: 7.5% of basic salary ■ UIF: 1% of basic salary ■ PAYE: Work from an EMP10 (tax deductions table) of a previous tax year or use the
tax tables on the SARS website to calculate the tax payable by the employees. Also make sure that you work from the taxable income.
■ Medical fund: Employees pay 30% of the monthly medical fund contribution. (Main member – R600 p.m., spouse/adult dependant – R800 p.m., per child – R400 p.m.)
Monthly employer contributions: ■ Pension fund: 9% of basic or normal time salary ■ UIF: 1% of basic salary ■ Medical fund: Employer pays 70% of the the monthly medical fund contribution.
(Main member – R600 p.m., spouse/adult dependant – R800 p.m., per child – R400 p.m.)
You will be provided with a blank Salaries Journal page.
ACTIVITY 7.5 Complete a Wages Journal FORMATIVE ASSESSMENT
Based on the information below, complete the Wages Journal, showing column totals, for KZN Fashions for the week ending 15 March 2020. Draw your own Wages Journal and Ledger accounts, rounding off amounts to the nearest rand.
All employees are required to work 40 normal hours per week.
This table shows rates and hours worked during the week ending 15 March 2020. Deductions are set out after the table.
Employee Marital status
Dependants Hours worked
Normal time rate
Overtime rate
caitlin DIKO Single None 54 R50 R75
Mary KOLI Married 3 49 R60 R90
RememberIn the case where there is only one more decimal than the decimal to which you are rounding of, the general rules for rounding off are the following:
When the decimal after the decimal to which you are rounding off equals 5 or more, you round up, not down.
For example, rounding R41.075 off to the nearest cent gives R41.08.
When the decimal after the decimal to which you are rounding off is less than 5, you round down.
For example, rounding R41.074 off to the nearest cent gives R41.07.
However, R41.0745 will be rounded off to R41.08. Why?
9781485717355_ntd_iac_n4_stb_eng_za.indb 1529781485717355_ntd_iac_n4_stb_eng_za.indb 152 2020/05/22 18:212020/05/22 18:21
153 Unit 5: Salary advice and Salaries Journal
Mo
du
le 7
Deductions: ■ PAYE: 18% of taxable income ■ Medical aid: R100 per week for single member, R150 per week for 2 adult members,
R50 per under age dependant per week. The employer contributes R1.50 for every R1 contributed by the employee towards medical aid.
■ Pension Fund: 7.5% of the normal wage of employees. The employer contributes R2 for every R1 contributed by the employee.
■ UIF: Amounts as prescribed by RSA legislation. ■ Staff Association: R10 per week per employee.
9781485717355_ntd_iac_n4_stb_eng_za.indb 1539781485717355_ntd_iac_n4_stb_eng_za.indb 153 2020/05/22 18:212020/05/22 18:21
154 Module 7: Wages and Salaries Journal
LEARNING OUTCOMES
■ Record appropriate accounting entries regarding the wages and Salaries Journal in the Cash Payments Journal (CPJ)
IntroductionThe CPJ is used for recording both Wages Journal payments and Salaries Journal payments. We include examples of the CPJ for wage and salary transactions together with some pointers to important accounting details. Your facilitator or lecturer will guide you further.
6.1 Recording different wage transactions in the CPJ
Every week one cash cheque (see amounts in red) is issued to pay the net wages to employees. This is cashed at the Bank and the money is placed in different wage envelopes according to what is due to each employee.
Unit 6: Recording wage and salary transactions in the CPJ
9781485717355_ntd_iac_n4_stb_eng_za.indb 1549781485717355_ntd_iac_n4_stb_eng_za.indb 154 2020/05/22 18:212020/05/22 18:21
155 Unit 6: Recording wage and salary transactions in the CPJ
Mo
du
le 7
Wag
es J
ou
rnal
of
CH
ICK
EN R
AN
CH
fo
r th
e w
eek
end
ed 7
Feb
ruar
y 20
20
WJ6
Empl
oyee
s
Nor
mal
tim
eO
vert
ime
Gro
ss
wag
e
Empl
oyee
ded
ucti
ons
Net
Wag
e
Empl
oyer
con
trib
utio
ns
Tari
ffH
ours
Am
ount
Tari
ffH
ours
Am
ount
Pens
ion
Med
ical
PA
YEU
IFU
nion
Tota
lPe
nsio
nM
edic
alU
IFTo
tal
P Kh
umal
oR3
245
R1 4
40R4
87
R336
R1 7
76R9
4R4
00R2
52R1
4R1
0R7
70R1
006
R141
R800
R14
R955
J Mtu
liR3
245
R1 4
40R4
85
R240
R1 6
80R9
4R2
50R2
38R1
4R1
0R6
06R1
074
R141
R500
R14
R655
R2 8
80R5
76R3
456
R188
R650
R490
R28
R20
R1 3
76R2
080
R282
R1 3
00R2
8R1
610
N15
B16
B17
B18
B19
B20
B15
B16
B17
B19
Wag
es J
ou
rnal
of
CH
ICK
EN R
AN
CH
fo
r th
e w
eek
end
ed 1
4 Fe
bru
ary
2020
W
J6
Empl
oyee
s
Nor
mal
tim
eO
vert
ime
Gro
ss
wag
e
Empl
oyee
ded
ucti
ons
Net
Wag
e
Empl
oyer
con
trib
utio
ns
Tari
ffH
ours
Am
ount
Tari
ffH
ours
Am
ount
Pens
ion
Med
ical
PA
YEU
IFU
nion
Tota
lPe
nsio
nM
edic
alU
IFTo
tal
P Kh
umal
oR3
245
R1 4
40R4
87
R336
R1 7
76R9
4R4
00R2
52R1
4R1
0R7
70R1
006
R141
R800
R14
R955
J Mtu
liR3
245
R1 4
40R4
85
R240
R1 6
80R9
4R2
50R2
38R1
4R1
0R6
06R1
074
R141
R500
R14
R655
R2 8
80R5
76R3
456
R188
R650
R490
R28
R20
R1 3
76R2
080
R282
R1 3
00R2
8R1
610
N15
B16
B17
B18
B19
B20
B15
B16
B17
B19
Wag
es J
ou
rnal
of
CH
ICK
EN R
AN
CH
fo
r th
e w
eek
end
ed 2
1 Fe
bru
ary
2020
W
J6
Empl
oyee
s
Nor
mal
tim
eO
vert
ime
Gro
ss
wag
e
Empl
oyee
ded
ucti
ons
Net
Wag
e
Empl
oyer
con
trib
utio
ns
Tari
ffH
ours
Am
ount
Tari
ffH
ours
Am
ount
Pens
ion
Med
ical
PA
YEU
IFU
nion
Tota
lPe
nsio
nM
edic
alU
IFTo
tal
P Kh
umal
oR3
245
R1 4
40R4
87
R336
R1 7
76R9
4R4
00R2
52R1
4R1
0R7
70R1
006
R141
R800
R14
R955
J Mtu
liR3
245
R1 4
40R4
85
R240
R1 6
80R9
4R2
50R2
38R1
4R1
0R6
06R1
074
R141
R500
R14
R655
R2 8
80R5
76R3
456
R188
R650
R490
R28
R20
R1 3
76R2
080
R282
R1 3
00R2
8R1
610
N15
B16
B17
B18
B19
B20
B15
B16
B17
B19
Wag
es J
ou
rnal
of
CH
ICK
EN R
AN
CH
fo
r th
e w
eek
end
ed 2
8 Fe
bru
ary
2020
W
J6
Empl
oyee
s
Nor
mal
tim
eO
vert
ime
Gro
ss
wag
e
Empl
oyee
ded
ucti
ons
Net
Wag
e
Empl
oyer
con
trib
utio
ns
Tari
ffH
ours
Am
ount
Tari
ffH
ours
Am
ount
Pens
ion
Med
ical
PA
YEU
IFU
nion
Tota
lPe
nsio
nM
edic
alU
IFTo
tal
P Kh
umal
oR3
245
R1 4
40R4
87
R336
R1 7
76R9
4R4
00R2
52R1
4R1
0R7
70R1
006
R141
R800
R14
R955
J Mtu
liR3
245
R1 4
40R4
85
R240
R1 6
80R9
4R2
50R2
38R1
4R1
0R6
06R1
074
R141
R500
R14
R655
R2 8
80R5
76R3
456
R188
R650
R490
R28
R20
R1 3
76R2
080
R282
R1 3
00R2
8R1
610
N15
B16
B17
B18
B19
B20
B15
B16
B17
B19
9781485717355_ntd_iac_n4_stb_eng_za.indb 1559781485717355_ntd_iac_n4_stb_eng_za.indb 155 2020/05/22 18:212020/05/22 18:21
156 Module 7: Wages and Salaries Journal
In these four Wages Journals, all entries are the same each week. In real life, every week will be different, due to illness, different workloads, and so on.
The weekly net wage cheques and the monthly employee deductions and employer contributions will be recorded in the CPJ.
CASH PAYMENTS JOURNAL OF CHICKEN RANCH FOR FEBRUARY 2020 CPJ2
Doc. Day
Name of Payee / Beneficiary Fol. Bank
Creditors for wages Purchases
Creditors control
Sundry Accounts
Amount Fol. Details
100 7 Cash R2 080 R2 080
120 14 Cash R2 080 R2 080
140 21 Cash R2 080 R2 080
160 28 Cash R2 080 R2 080
180 Pension Fund R1 880 R1 880 B16 Pension Fund
181 Medical Fund R7 800 R7 800 B17 Medical Fund
182 SARS R1 960 R1 960 B18 SARS
183 UIF R224 R224 B19 UIF
184 Union Fees R80 R80 B20 Union Fees
R20 264 R8 320 – – R11 944
B3 B15
The weekly net wage (red) is entered in the new Creditors for Wages column in the CPJ.At the end of the month, the employee deductions and employer contributions are paid over to the different
funds. These amounts are entered in the Sundry column in the CPJ (see amounts in green).
The total monthly amount for Pension Fund:
Week 1 R188 + R282Week 2 R188 + R282Week 3 R188 + R282Week 4 R188 + R282
= R1 880
The total monthly amount for Medical Fund:
Week 1 R650 + R1 300Week 2 R650 + R1 300Week 3 R650 + R1 300Week 4 R650 + R1 300
= R7 880
Now calculate the total monthly amounts for PAYE (SARS), UIF and Union Fees.
Do you agree with the Pension Fund and Medical Fund amounts?
CASH PAYMENTS JOURNAL OF CHICKEN RANCH FOR FEBRUARY 2020
Doc. DayName of Payee / Beneficiary Fol. Bank
Creditors for wages
100 7 P Khumalo R1 006 R1 006
101 J Mtuli R1 074 R1 074
120 14 P Khumalo R1 006 R1 006
121 J Mtuli R1 074 R1 074
140 21 P Khumalo R1 006 R1 006
141 J Mtuli R1 074 R1 074
160 28 P Khumalo R1 006 R1 006
161 J Mtuli R1 074 R1 074
RememberMany entities no longer use a cheque system to pay weekly wages, but do electronic funds transfers.
Instead of recording a cash entry in the CPJ under Payee, they will then record the names of the employees in the Name of Payee / Beneficiary column.
R2 080
9781485717355_ntd_iac_n4_stb_eng_za.indb 1569781485717355_ntd_iac_n4_stb_eng_za.indb 156 2020/05/22 18:212020/05/22 18:21
157 Unit 6: Recording wage and salary transactions in the CPJ
Mo
du
le 7
6.2 Recording different salary transactions in the CPJH
ere
is t
he S
alar
ies
Jour
nal o
f a
stat
ione
ry s
hop.
Wag
es J
ou
rnal
fo
r th
e w
eek
end
ed 7
Feb
ruar
y 20
20
WJ6
Empl
oyee
sG
ross
Sa
lary
Empl
oyee
ded
ucti
ons
Net
Sala
ry
Empl
oyer
con
trib
utio
ns
Pens
ion
Med
ical
Pa
yeU
IF
Staf
f A
ssoc
-ia
tion
Tota
lPe
nsio
nM
edic
alU
IFTo
tal
K M
tsho
nga
10 0
0075
01
000
500
100
502
400
7 60
01
125
1 50
010
02
725
J Mbe
lu16
000
1 20
02
000
1 20
014
950
4 59
911
401
1 80
03
000
149
4 94
9
26 0
001
950
3 00
01
700
249
100
6 99
919
001
2 92
54
500
249
7 67
4
N15
B16
B17
B18
B19
B20
B15
B16
B17
B19
Loo
k at
the
UIF
ded
ucti
ons.
■
For
K M
tsho
nga
the
UIF
ded
ucti
on is
R10
0. I
s th
is c
alcu
lati
on c
orre
ct?
■
For
J M
belu
the
UIF
ded
ucti
on is
R14
9. I
s th
is c
alcu
lati
on c
orre
ct?
Hin
t: G
o ba
ck t
o w
hat
you
have
lear
nt a
bout
UIF
ded
ucti
ons
earl
ier
in t
his
mod
ule.
CA
SH P
AY
MEN
TS J
OU
RN
AL
OF
CA
MPU
S ST
ATI
ON
ERS
FOR
TH
E M
ON
TH E
ND
ED 3
1 JA
NU
ARY
202
0 CPJ
1
Doc
.D
ayN
ame
of P
ayee
/ Be
nefic
iary
Fol.
Bank
Cred
itor
s fo
r w
ages
Purc
hase
sCr
edit
ors
cont
rol
Sund
ry A
ccou
nts
Am
ount
Fol.
Det
ails
180
31K
Mts
hong
a7
600
7 60
0
181
J Mbe
lu11
401
11 4
01
182
Pens
ion
Fund
4 87
54
875
B16
Pens
ion
Fund
183
Med
ical F
und
7 50
07
500
B17
Med
ical F
und
184
SARS
1 70
01
700
B18
SARS
185
UIF
498
498
B19
UIF
186
Staf
f Ass
ocia
tion
100
100
B20
Staf
f Ass
ocia
tion
33 6
7419
001
––
14 6
73
B3B1
5
The
acc
ount
nam
e “C
redi
tors
for
wag
es”
refe
rs t
o th
e ne
t sa
lari
es o
f th
e em
ploy
ees.
C
alcu
late
the
tot
al m
onth
ly a
mou
nts
for
Pen
sion
Fun
d, M
edic
al F
und,
PA
YE
(S
AR
S),
UIF
and
Sta
ff A
ssoc
iati
on.
Do
you
agre
e w
ith
the
tota
l mon
thly
am
ount
s as
giv
en in
the
CP
J?
9781485717355_ntd_iac_n4_stb_eng_za.indb 1579781485717355_ntd_iac_n4_stb_eng_za.indb 157 2020/05/22 18:212020/05/22 18:21
158 Module 7: Wages and Salaries Journal
IntroductionWe have discussed posting to the Ledgers in Module 5. Posting means to record certain amounts in General Ledger accounts. You will be introduced to a few new Ledger accounts relating to wages and salaries.
7.1 From the Wages Journal to the LedgerHere is an example of a completed Wages Journal. We will use it to illustrate certain concepts and processes.
Unit 7: Posting wage and salary transactions to Ledger accounts (enrichment)
Wages Journal for the week ended 7 March 2020 WJ3
Employees
Normal time Overtime Gross wagesTariff Hours Amount Tariff Hours Amount
Mr P Hina 32 45 1 440 48 5 240 1 680
Mr P Dubula 40 43 1 720 60 3 180 1 900
3 160 420 3 580
Wages Journal for the week ended 7 March 2020 (continued) WJ3
Employees’ deductions NetWages
Employer’s contributions
Pension Medical PAYE UIF Union Total Pension Medical UIF Total
108 400 236 14 10 768 912 162 800 14 976
129 300 266 17 10 722 1 178 194 600 17 811
237 700 502 31 20 1 490 2 090 356 1 400 31 1 787
7.1.1 Wage and salary liabilitiesThe deductions of employees are liabilities to the business as the business owes these monies of the employees to various institutions. These monies do not belong to the business. When the applicable liabilities accounts increase at the ned of each week, they are always credited. There are five of these liability accounts:
■ Pension Fund ■ Medical Aid ■ SARS (PAYE) ■ Unemployment Insurance Fund ■ Staff Association
9781485717355_ntd_iac_n4_stb_eng_za.indb 1589781485717355_ntd_iac_n4_stb_eng_za.indb 158 2020/05/22 18:212020/05/22 18:21
159 Unit 7: Posting wage and salary transactions to Ledger accounts (enrichment)
Mo
du
le 7
WORKED EXAMPLE Posting from a Wages Journal
We use different colours to indicate the entries in the sections of the Wages Journal above and to follow the posting process.Step 1 Post from the Deductions section and Net Wages column
Wages Journal
Name
Employee deductions NetWagesPension Medical PAYE UIF Union Total
Mr P Hina 108 400 236 14 10 768 912
Mr P Dubula 129 300 266 17 10 722 1 178
237 700 502 31 20 1 490 2 090
Balance sheet accountsGeneral Ledger
Dr Pension Fund (B20) Cr
Date Details Fol. Amount Date Details Fol. Amount
2020 Mar 7 Wages 237
Dr Medical Aid (B21) Cr
Date Details Fol. Amount Date Details Fol. Amount
2020 Mar 7 Wages 700
Dr SARS (B22) Cr
Date Details Fol. Amount Date Details Fol. Amount
2020 Mar 7 Wages 502
Dr Unemployment Insurance Fund (B23) Cr
Date Details Fol. Amount Date Details Fol. Amount
2020 Mar 7 Wages 31
Dr Staff Association (B24) Cr
Date Details Fol. Amount Date Details Fol. Amount
2020 Mar 7 Wages 20
Dr Creditors Wages (B25) Cr
Date Details Fol. Amount Date Details Fol. Amount
2020 Mar 7 Wages 2 090
A new account Creditor wages or Creditors for wages is used to record the total of the net wages.
9781485717355_ntd_iac_n4_stb_eng_za.indb 1599781485717355_ntd_iac_n4_stb_eng_za.indb 159 2020/05/22 18:212020/05/22 18:21
160 Module 7: Wages and Salaries Journal
The employer contributions (Expenses) must also be paid into the required liability accounts, since these amounts will later also be paid over to the various institutions.
At the end of the month both employee deductions and employer contributions will be paid over, usually by means of electronic payments.
Step 2 Post from the Employer Contributions section to the Liabilities accounts.
Name
Employer contributions
Pension Medical UIF Total
Mr P Hina 162 800 14 976
Mr P Dubula 194 600 17 811
356 1 400 31 1 787
Dr Pension Fund (B20) Cr
Date Details Fol. Amount Date Details Fol. Amount
2020 Mar 7 Wages 237
Pension fund contribution 356
Dr Medical Aid (B21) Cr
Date Details Fol. Amount Date Details Fol. Amount
2020 Mar 7 Wages 700
Medical aid contribution 1 400
Dr Unemployment Insurance Fund (B23) Cr
Date Details Fol. Amount Date Details Fol. Amount
2020 Mar 7 Wages 31
Unemployment Insurance Fund contribution 31
9781485717355_ntd_iac_n4_stb_eng_za.indb 1609781485717355_ntd_iac_n4_stb_eng_za.indb 160 2020/05/22 18:212020/05/22 18:21
161 Unit 7: Posting wage and salary transactions to Ledger accounts (enrichment)
Mo
du
le 7
Step 3 Post from the Employer Contributions section to the Expenses accounts
The three different contributions of employers are all business expenses. This means that these accounts must be debited with their amounts at the end of each week.
The three Expenses accounts are: ■ Pension Fund Contribution ■ Medical Aid Contribution ■ Unemployment Insurance Fund Contribution
Name
Employer contributions
Pension Medical UIF Total
Mr P Hina 162 800 14 976
Mr P Dubula 194 600 17 811
356 1 400 31 1 787
Nominal Accounts Section
Dr Wages (N20) Cr
Date Details Fol. Amount Date Details Fol. Amount
2020 Mar 7 Gross wages 3 580
Dr Pension Fund Contribution (N21) Cr
Date Details Fol. Amount Date Details Fol. Amount
2020 Mar 7 Pension fund 356
Dr Medical Aid Contribution (N22) Cr
Date Details Fol. Amount Date Details Fol. Amount
2020 Mar 7 Medical aid 1 400
Dr Unemployment Insurance Fund Contribution (N23) Cr
Date Details Fol. Amount Date Details Fol. Amount
2020 Mar 7
Unemployment Insurance Fund 31
RememberThe posting of employer contributions is actually a double transaction:• posting of employer
contributions to the respective funds accounts (Step 2)
• posting of employer contributions to the respective expense accounts (Step 3)
9781485717355_ntd_iac_n4_stb_eng_za.indb 1619781485717355_ntd_iac_n4_stb_eng_za.indb 161 2020/05/22 18:212020/05/22 18:21
162 Module 7: Wages and Salaries Journal
Step 4 Post from Gross WagesThe weekly total of the gross wages must be posted to the wages account. Wages is an ordinary Expenses account. This account must be debited.
Wages Journal for the week ended 7 March 2020 WJ3
Employees
Normal time Overtime Gross wagesTariff Hours Amount Tariff Hours Amount
Mr P Hina 32 45 1 440 48 5 240 1 680
Mr P Dubula 40 43 1 720 60 3 180 1 900
3 160 420 3 580
Nominal Accounts Section
Dr Wages (N20) Cr
Date Details Fol. Amount Date Details Fol. Amount
2020 Mar 15 Gross wages 3 580
7.1.2 Results of posting processWe have shown you the different posting entries relating to the Wages Journal (entries of only one week of the month).
Do you agree that the end result of the posting process from the Wages Journal to the Ledger accounts will be as follows?
Balance sheet accountsGeneral Ledger
Dr Pension Fund (B20) Cr
Date Details Fol. Amount Date Details Fol. Amount
2020 Mar 7 Wages 237
Pension fund contribution 356
Dr Medical Aid (B21) Cr
Date Details Fol. Amount Date Details Fol. Amount
2020 Mar 7 Wages 700
Medical aid contribution 1 400
Dr SARS (B22) Cr
Date Details Fol. Amount Date Details Fol. Amount
2020 Mar 7 Wages 502
9781485717355_ntd_iac_n4_stb_eng_za.indb 1629781485717355_ntd_iac_n4_stb_eng_za.indb 162 2020/05/22 18:212020/05/22 18:21
163 Unit 7: Posting wage and salary transactions to Ledger accounts (enrichment)
Mo
du
le 7
Dr Unemployment Insurance Fund (B23) Cr
Date Details Fol. Amount Date Details Fol. Amount
2020 Mar 7 Wages 31
Unemployment Insurance Fund contribution 31
Dr Staff Association (B24) Cr
Date Details Fol. Amount Date Details Fol. Amount
2020 Mar 7 Wages 20
Dr Creditors Wages (B25) Cr
Date Details Fol. Amount Date Details Fol. Amount
2020 Mar 7 Wages 2 090
Nominal Accounts Section
Dr Wages (N20) Cr
Date Details Fol. Amount Date Details Fol. Amount
2020 Mar 7 Gross wages 3 580
Dr Pension Fund Contribution (N21) Cr
Date Details Fol. Amount Date Details Fol. Amount
2020 Mar 7 Pension fund 356
Dr Medical Aid Contribution (N22) Cr
Date Details Fol. Amount Date Details Fol. Amount
2020 Mar 7 Medical aid 1 400
Dr Unemployment Insurance Fund Contribution (N23) Cr
Date Details Fol. Amount Date Details Fol. Amount
2020 Mar 7
Unemployment Insurance Fund 31
9781485717355_ntd_iac_n4_stb_eng_za.indb 1639781485717355_ntd_iac_n4_stb_eng_za.indb 163 2020/05/22 18:212020/05/22 18:21
164 Module 7: Wages and Salaries Journal
Unit 8: Month-end procedures for some accounts (enrichment)
8.1 Month-end procedures for some accounts
WORKED EXAMPLE Wages of Mr Hina and Mr Dubula revisited
At the end of the month, the Pension Fund account will look as follows (assuming employees worked the same number of hours every week). The wage entries for the week ended on 15 March are in colour:
Dr Pension Fund (B20) Cr
Date Details Fol. Amount Date Details Fol. Amount
2020 Mar 31 Bank CPJ3 2 372
2020 Mar 8 Wages 237
Pension fund contribution 356
15 Wages 237
Pension fund contribution 356
22 Wages 237
Pension fund contribution 356
29 Wages 237
Pension fund contribution 356
2 372 2 372
■ Entries for four weeks are recorded. ■ At the end of the month these monies (R2 372) will be paid over to the Pension Fund. ■ The payment will be recorded in the CPJ. The double entry is: Debit the Pension Fund and credit the Bank
(Assets decrease). ■ The account for that month will now be closed off and the totals are indicated.
9781485717355_ntd_iac_n4_stb_eng_za.indb 1649781485717355_ntd_iac_n4_stb_eng_za.indb 164 2020/05/22 18:212020/05/22 18:21
165 Unit 8: Month-end procedures for some accounts (enrichment)
Mo
du
le 7
At the end of the month, the SARS (PAYE) account will look as follows:
Dr SARS (B22) Cr
Date Details Fol. Amount Date Details Fol. Amount
2020 Mar 31 Bank CPJ3 2 008
2020 Mar 8 Wages 502
15 Wages 502
22 Wages 502
29 Wages 502
2 008 2 008
Entries for four weeks are recorded. ■ At the end of the month these monies (R2 008) will be paid over to SARS. ■ The payment will be recorded in the CPJ. The double entry is: Debit the SARS (PAYE) account and credit the Bank
(Assets decrease) ■ The account for that month will now be closed off and the totals are indicated. ■ The same will happen with the Medical Aid (B21), Unemployment Insurance Fund (B23) and Staff Association (B24)
accounts.
Exam preparationExpect to see a question regarding wages or salaries in every DHET exam paper.
Module summary■ We have discussed and given activities on two types of wage systems,
overtime remuneration, as well as various employee deductions and employer contributions.
■ We have also covered compiling the weekly Wages Journal and the monthly Salaries Journal.
■ Lastly, we recorded wage and salary transactions in the monthly Cash Payments Journal.
9781485717355_ntd_iac_n4_stb_eng_za.indb 1659781485717355_ntd_iac_n4_stb_eng_za.indb 165 2020/05/22 18:212020/05/22 18:21