Question

Month end payroll accruals: you work for a large multinational organization and the Canadian subsidiary is being spun off into a separate organization. You will need to start doing some of the accounting functions that were previously handled by the head office in Britain you have been asked by the controller to prepare a memo with the different monthly accruals required for the biweekly payroll and how each will be accrued.

Answer 1

Dear Sir,

As we move to doing payroll accounting function for our canadian subsidiary, payroll accrual will become an important part of the organization. The main accruals shall be salaries, wages, commissions , bonuses and payroll taxes.

Salaries will be accrued based on the number of days an employee has worked. This shall be multiplied by the rate per day according to the compensation sheet.

Wages shall be calculated dependent on the productive hours worked by an employee. The hours will be multiplied by rate per hour.

Commissions and bonus shall be accrued based on the conditions related to these two being met. For example, the certain sales target being met.

Payroll taxes are a percentage of the gross income of the employee and will be accrued on that basis.

Regards,

XYZ