POBC - Wages Control

What is the total wages expense for the month?

Answer explanation

Total wages expense is made up 3 items: Gross pay, Employer's NIC and Employer's Pensions.

Gross wages: £5,000

Employer's NIC: £800

Employer's Pension: £1,500

Total wages expense= £7,300

What is the Net pay payable to staff for the month?

Answer explanation

Total to pay to staff can be calculated in one of TWO ways:

Method 1 - Find the balance remaining after all the liabilities to pensions, HMRC and OXFAM

Pensions liability: £2,600

HMRC liability: £2,600

OXFAM liability: £200

Total liabilities £5,400

Total wages expense £7,300

Balance - £7300 less £5400 = £1,900

Method 2:

Gross pay £5000

Less:

PAYE (£1200)

Emplyee NIC (£600)

Emplyee Pension (£1100)

OXFAM (£200)

Net pay £1900

What is the total pensions liability for the month?

Answer explanation

Total Pensions liability:

Employee pensions: £1,100

Employer's Pension: £1,500

Total pensions liability= £2,600

What is the HMRC liability for the month?

Answer explanation

Total HMRC liability:

PAYE (Income Tax): £1,200

Employee's NIC: £600

Employer's NIC: £800

Total HMRC liability= £2,600

What is the double entry for the wages expense?

• Dr Wages expense: 7300

  Cr Wages control: 7300

• Dr Wages control: 7300

  Cr Wages expense: 7300

What are the journal entries to record the pensions liability?

• Dr Pensions: 2600

  Cr Wages control: 2600

• Dr Wages control: 2600

  Cr Pensions: 2600

Answer explanation

Pensions is a liability and so it will have a credit entry.

What are the journal entries to record the HMRC liability?

• Dr HMRC: 2600

  Cr Wages control: 2600

• Dr Wages control: 2600

  Cr HMRC: 2600

Answer explanation

HMRC is a liability and so it will have a credit entry.

What are the journal entries to record the OXFAM liability?

• Dr OXFAM: 200

  Cr Wages control: 200

• Dr Wages control: 200

  Cr OXFAM: 200

Answer explanation

OXFAM is a liability and so it will have a credit entry.

What is the Net pay payable to staff for the month?

Answer explanation

Total to pay to staff can be calculated in one of TWO ways:

Method 1 - Find the balance remaining after all the liabilities to pensions, HMRC and OXFAM

Pensions liability: £2,600

HMRC liability: £2,600

OXFAM liability: £200

Total liabilities £5,400

Total wages expense £7,300

Balance - £7300 less £5400 = £1,900

Method 2:

Gross pay £5000

Less:

PAYE (£1200)

Emplyee NIC (£600)

Emplyee Pension (£1100)

OXFAM (£200)

Net pay £1900

What are the journal entries required to record the net pay?

• Dr Bank: 1900

  Cr Wages control: 1900

• Dr Wages control: 1900

  Cr Bank: 1900

Answer explanation

The net pay is paid immediately and will be a credit in business Bank account (Bank asset reducing)