Wages conrtol A/C

[junior1987]

Hi guys could somebody please clear something up for me? I've been taught that the debit entries in the wages control acount are net pay,Paye, employees NIC and then total gross pay as a credit entry. What happens to the employer's NIC? What are the entries for this? Are you supposd to write a balance entry which equals the employers NIC? and also what are the entries in the expense account?
Sorry for all the questions....any help appreciated

[katsutlieff]

I have only read through payroll quickly, haven't got that far yet, BUT this is what I have read. Hope it is of some help.

Three Main accounts

Gross Wages Control A/c
Wages Expenses A/C
PAYE/NIC A/C

with four double entries

Gross Wage; Debit wages expense a/c
Credit gross wages control a/c

Net wages; Debit gross wages control a/c
Credit to the cash payments book

PAYE/NIC deducted from the gross wages;
Debit gross wages control a/c
Credit PAYE/NIC creditor a/c

Employers NIC; Debit wages expense a/c
Credit gross wages control a/c
and
debit gross wages control a/c
credit PAYE/NIC creditor a/c

Really hope that is of some use:001_unsure:

[Oy_mate]

The employer's NIC is an amount paid above the gross pay. So the entries to make for this are:

Debit - Wages expense account
Credit - PAYE/NIC creditor

In the wages control account the employer's NIC amount is credited as the company has to pay the money to HMRC and then debited because you are effectively paying the amount by increasing the PAYE/NIC creditor.

[junior1987]

Thanks for the replies. I think i understand that now, great stuff. Also does anybody know why that the entries in the expense account are debits??? I would have though that being an expense it is a credit entry? Sorry just can't get my head around it.
Cheers

[Oy_mate]

The easiest way to remember is think about what happens to the bank. The bank is normally a debtor, it owes you the money that you have put in to it. All debtors have debit balances.

When you buy something you decrease the amount of money in the bank:
Credit Bank
Debit Expenses

When you receive money from a creditor or from cash sales:
Debit Bank
Credit Sales

So when money goes into the bank the debtor is increasing and therefore needs to be debited. If bank is being debited then the other side needs to be a credit, which is why sales are credits.

[emmamac]

Our tutor taught us to remember that if your account is part of the double entry and you are paying something i.e. it is an expense then it is a debit. She also told us that you can relate everything to the cash book, I just remember In/Out - Debit/Credit if you relate everything back to this you can work out where the opposite entry goes. :001_smile: