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<html><head><meta http-equiv="Content-Type" content="text/html; charset=ISO-8859-1"><title>14.4. Example</title><meta name="generator" content="DocBook XSL Stylesheets V1.45"><link rel="home" href="index.html" title="GnuCash Tutorial and Concepts Guide"><link rel="up" href="chapter14.html" title="Chapter 14. Payroll"><link rel="previous" href="bus_pay_protocol1.html" title="14.3. Protocol"><link rel="next" href="appendixa.html" title="Appendix A. Migration Guide"></head><body bgcolor="white" text="black" link="#0000FF" vlink="#840084" alink="#0000FF"><div xmlns="http://www.w3.org/TR/xhtml1/transitional" class="navheader"><table width="100%" summary="Navigation header"><tr><th colspan="3" align="center">14.4. Example</th></tr><tr><td width="20%" align="left"><a accesskey="p" href="bus_pay_protocol1.html"><<<Prev</a></td><th width="60%" align="center">Chapter 14. Payroll</th><td width="20%" align="right"><a accesskey="n" href="appendixa.html">Next>>></a></td></tr></table><hr></hr></div><div class="sect1"><div class="titlepage"><div><h2 class="title" style="clear: both"><a name="bus_pay_example1"></a>14.4. Example</h2></div></div><p>Using the account setup seen previously, let's go through an example. Assume that there are 2 employees (E1 and E2) which each earn $1000 per month gross salary. The employee contribution to Tax1 and Tax2 are 10% and 5% respectively. The company contribution to Tax1 and Tax2 are 15% and 10% each on top of the employees gross salary.</p><p>Staring with $50k in the bank, and before doing any payroll, the account hierarchy looks like this:</p><div class="screenshot"><div class="mediaobject"><img src="figures/bus_pay_ex1.png" alt="Payroll Example 1"><div class="caption"><p>Payroll Initial Setup
</p></div></div></div><div class="sect2"><div class="titlepage"><div><h3 class="title"><a name="bus_pay_exampleprotocol2"></a>14.4.1. Build Protocol</h3></div></div><p>The deductions list for employee 1:</p><div class="itemizedlist"><ul><li><p><b>E_GROSS_SALARY</b> - Employee gross salary - <b>$1000</b></p></li><li><p><b>E_TAX1</b> - Employee contribution to tax1 - <b>$100</b> (10% of E_GROSS_SALARY)</p></li><li><p><b>E_TAX2</b> - Employee contribution to tax2 - <b>$50</b> (5% of E_GROSS_SALARY)</p></li><li><p><b>C_TAX1</b> - Company contribution to tax1 - <b>$150</b> (15% of E_GROSS_SALARY)</p></li><li><p><b>C_TAX2</b> - Company contribution to tax2 - <b>$100</b> (10% of E_GROSS_SALARY)</p></li></ul></div><p>
<div class="table"><p><b>Table 14.2. Transaction Map for Employee 1</b></p><table summary="Transaction Map for Employee 1" border="1"><colgroup><col><col><col></colgroup><tbody><tr><td>Account</td><td>Increase</td><td>Decrease</td></tr><tr><td>Assets:Checking</td><td></td><td>$850 (E_NET_SALARY)</td></tr><tr><td>Expenses:Salaries</td><td>$1000 (E_GROSS_SALARY)</td><td></td></tr><tr><td>Liabilities:Tax1</td><td></td><td>$100 (E_TAX1)</td></tr><tr><td>Liabilities:Tax2</td><td></td><td>$50 (E_TAX2)</td></tr><tr><td>Expenses:Tax1</td><td>$150 (C_TAX1)</td><td></td></tr><tr><td>Liabilities:Tax1</td><td></td><td>$150 (C_TAX1)</td></tr><tr><td>Expenses:Tax2</td><td>$100 (C_TAX2)</td><td></td></tr><tr><td>Liabilities:Tax2</td><td></td><td>$100 (C_TAX2)</td></tr></tbody></table></div>
</p></div><div class="sect2"><div class="titlepage"><div><h3 class="title"><a name="bus_pay_examplepay2"></a>14.4.2. Pay an Employee</h3></div></div><p>Now, enter the first split transaction for employee 1 in the checking account. The split transaction will look like this:</p><div class="screenshot"><div class="mediaobject"><img src="figures/bus_pay_ex2.png" alt="Payroll Example 2"><div class="caption"><p>Employee 1 Split Transaction
</p></div></div></div><div xmlns="http://www.w3.org/TR/xhtml1/transitional" class="tip" style="margin-left: 0.5in; margin-right: 0.5in;"><table border="0"><tr><td rowspan="2" align="center" valign="top" width="25"><img src="./stylesheet/tip.png"></img></td><th align="left" valign="top">Tip</th></tr><tr><td colspan="2" align="left" valign="top"><p xmlns="">When paying employees, enter only the employee name in the Description area. If you decide to use GnuCash's check printing capabilities, the check will automatically be made out to the employee correctly. If you want to record other information in the transaction besides the employee name, use the Notes area, available when viewing the Register in double-line mode.</p></td></tr></table></div><p>Repeat this for the second employee, which leaves the account hierarchy looking like this:</p><div class="screenshot"><div class="mediaobject"><img src="figures/bus_pay_ex3.png" alt="Payroll Example 3"><div class="caption"><p>Account Tree After Salaries Paid
</p></div></div></div></div><div class="sect2"><div class="titlepage"><div><h3 class="title"><a name="bus_pay_examplegovt2"></a>14.4.3. Pay the Government</h3></div></div><p>The Liability:Tax1 and Liability:Tax2 accounts will continue to track how much you must pay to the government agencies responsible for each. When it is time to pay these agencies, make a transaction from the checking account to the liability accounts. No expense accounts are involved. The main account will then appear like this for this example:</p><div class="screenshot"><div class="mediaobject"><img src="figures/bus_pay_ex4.png" alt="Payroll Example 4"><div class="caption"><p>Accounts After Paying Government
</p></div></div></div></div></div><div xmlns="http://www.w3.org/TR/xhtml1/transitional" class="navfooter"><hr></hr><table width="100%" summary="Navigation footer"><tr><td width="40%" align="left"><a accesskey="p" href="bus_pay_protocol1.html"><<<Prev</a></td><td width="20%" align="center"><a accesskey="h" href="index.html">Home</a></td><td width="40%" align="right"><a accesskey="n" href="appendixa.html">Next>>></a></td></tr><tr><td width="40%" align="left">14.3. Protocol</td><td width="20%" align="center"><a accesskey="u" href="chapter14.html">Up</a></td><td width="40%" align="right">Appendix A. Migration Guide</td></tr></table></div></body></html>
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