De La Salle University

RVR College of Business

Accountancy Department

ACYCST1
ONLINE LEARNING!
AY 2020-2021
Accounting for Labor Part3

Toppr.com
 Study Objectives

1. Discuss the mandatory employers

contribution.
2. Explain the distribution of the payroll to:
a. Work in Process
b. Factory Overhead control
c. Selling and Administrative expenses
 Employer’s Payroll Contribution

These are NOT deducted from the employees’ gross pay

BUT are remitted/paid by the employer to the
respective agencies for the benefit of the employee:
– Social Security System (SSS)
– Philippine Health Insurance Corp. (Philhealth)
– Home Development Mutual Fund (HDMF)

Deleon, Jr. M., & Deleon, N. (2016). Cost Accounting, (2016 ed.). GIC Enterprises & Co., Inc., Manila, Philippines.
Guerrero, P. (2018). Cost Accounting: Principles and Procedural Application, (2018 ed.). GIC Enterprises & Co., Inc., Manila, Philippines.
Horngren, C., Datar, S. & Rajan, M. (2015). Cost Accounting: A Managerial Emphasis, (15th ed.). Pearson Education, Inc.
 Employer’s Payroll Contribution
Employers are responsible for periodically
reporting and paying the taxes to the
appropriate government agencies.

Employers who fail to file require reports or

pay taxes due are subject to civil, and in some
cases, criminal penalties.

Deleon, Jr. M., & Deleon, N. (2016). Cost Accounting, (2016 ed.). GIC Enterprises & Co., Inc., Manila, Philippines.
Guerrero, P. (2018). Cost Accounting: Principles and Procedural Application, (2018 ed.). GIC Enterprises & Co., Inc., Manila, Philippines.
Horngren, C., Datar, S. & Rajan, M. (2015). Cost Accounting: A Managerial Emphasis, (15th ed.). Pearson Education, Inc.
 Employer’s Payroll Contribution

A monthly payroll data made from time ticket

shows the following data pertaining to Job#2:

Employee – Mr. A
Rate per hour – P150
Number of hours work – 166 hours
Classification – factory worker

Deleon, Jr. M., & Deleon, N. (2016). Cost Accounting, (2016 ed.). GIC Enterprises & Co., Inc., Manila, Philippines.
Guerrero, P. (2018). Cost Accounting: Principles and Procedural Application, (2018 ed.). GIC Enterprises & Co., Inc., Manila, Philippines.
Horngren, C., Datar, S. & Rajan, M. (2015). Cost Accounting: A Managerial Emphasis, (15th ed.). Pearson Education, Inc.
 Employer’s Payroll Contribution
Computation:
Direct labor 166 hours at P150 P24,900.00
Factory overhead (overtime premium 6xP60) 360.00
Total earnings P25,260.00

Employers Contribution:
SSS contribution P2,070.00
Phil-Health contribution [(24,000 x 3.5%)/2] 420.00
HDMF contribution 100.00
Total employer’s contribution P2,590.00

Deleon, Jr. M., & Deleon, N. (2016). Cost Accounting, (2016 ed.). GIC Enterprises & Co., Inc., Manila, Philippines.
Guerrero, P. (2018). Cost Accounting: Principles and Procedural Application, (2018 ed.). GIC Enterprises & Co., Inc., Manila, Philippines.
Horngren, C., Datar, S. & Rajan, M. (2015). Cost Accounting: A Managerial Emphasis, (15th ed.). Pearson Education, Inc.
 Employer’s Payroll Contribution
The following schedule provides the information
necessary to record the employer’s payroll taxes for the
period.
SSS
Premiums Philhealth HDMF Total

Factory payroll 5,067 375 2,000 7,442

Selling &
Administrative 3,540 150 600 4,290

Total 8,607 525 2,600 11,732

Deleon, Jr. M., & Deleon, N. (2016). Cost Accounting, (2016 ed.). GIC Enterprises & Co., Inc., Manila, Philippines.
Guerrero, P. (2018). Cost Accounting: Principles and Procedural Application, (2018 ed.). GIC Enterprises & Co., Inc., Manila, Philippines.
Horngren, C., Datar, S. & Rajan, M. (2015). Cost Accounting: A Managerial Emphasis, (15th ed.). Pearson Education, Inc.
 Employer’s Payroll Contribution
The entry to record the employer’s payroll taxes is as
follows:

Factory Overhead Control 7,442

Selling & Administrative Expense 4,290
SSS Contributions Payable 8,607
Philhealth Contributions Payable 525
HDMF Contributions Payable 2,600

Deleon, Jr. M., & Deleon, N. (2016). Cost Accounting, (2016 ed.). GIC Enterprises & Co., Inc., Manila, Philippines.
Guerrero, P. (2018). Cost Accounting: Principles and Procedural Application, (2018 ed.). GIC Enterprises & Co., Inc., Manila, Philippines.
Horngren, C., Datar, S. & Rajan, M. (2015). Cost Accounting: A Managerial Emphasis, (15th ed.). Pearson Education, Inc.
 Payroll Distribution
Payroll Summary
for the period June 1-14

Factory Sales and Adm. Total

Employees Employees

Gross Earnings P100,000 P30,000 P130,000

Withholding & Deduction
Income Tax P 12,000 P 2,400 P 14,400
SSS Contribution P 3,330 P 950 P 4,280
Philhealth Contribution P 375 P 150 P 525
HDMF Contribution P 2,000 P 600 P 2,600
Total P 17,705 P 4,100 P 21,805

Net earnings P 82,295 P 25,900 P108,195

Deleon, Jr. M., & Deleon, N. (2016). Cost Accounting, (2016 ed.). GIC Enterprises & Co., Inc., Manila, Philippines.
Guerrero, P. (2018). Cost Accounting: Principles and Procedural Application, (2018 ed.). GIC Enterprises & Co., Inc., Manila, Philippines.
Horngren, C., Datar, S. & Rajan, M. (2015). Cost Accounting: A Managerial Emphasis, (15th ed.). Pearson Education, Inc.
 Payroll Distribution
After the data are verified, a payroll voucher is authorized and
recorded as follows:

June 1 Payroll 130,000

Withholding Tax payable 14,400
SSS Contribution Payable 4,280
Phil-health Contribution Payable 525
HDMF Contribution Payable 2,600
Salaries and Wages payable 108,195

To record the payment of the net earnings to employees, the following

entry is required:

June 1 Salaries and Wages payable 108,195

Cash 108,195

Deleon, Jr. M., & Deleon, N. (2016). Cost Accounting, (2016 ed.). GIC Enterprises & Co., Inc., Manila, Philippines.
Guerrero, P. (2018). Cost Accounting: Principles and Procedural Application, (2018 ed.). GIC Enterprises & Co., Inc., Manila, Philippines.
Horngren, C., Datar, S. & Rajan, M. (2015). Cost Accounting: A Managerial Emphasis, (15th ed.). Pearson Education, Inc.
 Payroll Distribution

Assuming that of the total factory payroll of P100,000 –

P30,000 is indirect labor, the entry to record the
distribution of the payroll is:

Work in Process 70,000

Factory Overhead control 30,000
Selling & Administrative Expense 30,000
Payroll 130,000

Deleon, Jr. M., & Deleon, N. (2016). Cost Accounting, (2016 ed.). GIC Enterprises & Co., Inc., Manila, Philippines.
Guerrero, P. (2018). Cost Accounting: Principles and Procedural Application, (2018 ed.). GIC Enterprises & Co., Inc., Manila, Philippines.
Horngren, C., Datar, S. & Rajan, M. (2015). Cost Accounting: A Managerial Emphasis, (15th ed.). Pearson Education, Inc.
 Accounting for Labor Part3
Reference and Thanks to:
Deleon, Jr. M., & Deleon, N. (2016). Cost Accounting, (2016 ed.).
GIC Enterprises & Co., Inc., Manila, Philippines.

Guerrero, P. (2018). Cost Accounting: Principles and Procedural

Application, (2018 ed.). GIC Enterprises & Co., Inc., Manila,
Philippines.

Horngren, C., Datar, S. & Rajan, M. (2015). Cost Accounting: A

Managerial Emphasis, (15th ed.). Pearson Education, Inc.