Page 60 - Account for Ag - 2019

10-2 Accounting for Agriculture CH 10]

Time Keeping. When remuneration is based upon time, a record of the time worked by each employee is
needed. Maintaining such records is called timekeeping. The records that are compiled may be very simple or
quite elaborate, depending upon the nature of the business and the number of employees. Sometimes such
records are merely notations in a small memorandum book. In other cases the employees may be required to
record the time of their arrival and departure each day. Many businesses use time clocks and clock cards to
record this information. Although a detailed record of the work done by each employee may not be needed in
order to calculate earnings, other considerations sometimes make it desirable to keep this information.

Wage Rates, Overtime. Wages and salaries must be paid at the rate agreed upon in each case. For
businesses engaged in interstate commerce, the rates must also conform to the requirements of the Federal Fair
Labor Standards Act. This Act, commonly known as the Wages and Hours Law, requires employers who are
covered by the statute to pay a minimum rate of 1.5 times the regular rate for all hours worked in excess of 40
hours per week. Persons holding executive, administrative, and certain supervisory positions are not covered by
this provision of the law.

In many industries the practice of paying premium rates for overtime hours has been considerably extended.
Certain overtime hours may be paid for at twice the base rate. Work on Sundays and holidays may be paid for at
overtime rates regardless of the total number of hours worked during the week. It is also a common practice for
companies that work night shifts to pay premium rates to those who work during these generally less desirable
hours.

To illustrate the calculation of the gross earnings of an employee, the following facts are given: Ralph
Shirley is employed at Newell's Feed & Supply Co. as a receiving clerk. He is paid at a rate of $8.00 per hour for
the first 40 hours each week and $12.00 ($8.00 + $4.00) per hour for all hours in excess of 40 hours. His time
card for the week shows that he worked 8 hours each day Monday through Thursday, 10 hours on Friday and 4
hours on Saturday. His earnings would be calculated as follows:

Hours Regular Overtime
DAY Worked Hours Hours
Monday ............... 8 8
Tuesday .............. 8 8
Wednesday ......... 8 8
Thursday ............. 8 8
Friday .................. 10 8 2
Saturday .............. 4 4
Total Hours ......... 46 40 6

Hours worked @ Regular rate 40 x $8.00 = $320.00
Hours worked @ overtime rate 6 x $12 = 72.00
Total gross earnings $392.00

DEDUCTIONS FROM EARNINGS

In most instances the amount actually paid to the worker is less than the amount of his earnings. The
difference is due primarily to the taxes assessed against the employee that the employer is required to withhold.
In addition to these, the employee may authorize various other deductions.

F.I.C.A. TAX. The Social Security Act provides that a qualified worker in a covered industry who reaches
the age of sixty-two and retires shall receive monthly retirement benefits for the remainder of their life. and in
addition certain medical benefits after reaching sixty-five. It further provides benefits for the family of a worker
covered by the act who dies either before or after reaching retirement age and benefits for covered workers who
become disabled. The benefits in each case are based upon the average earnings of the worker during the years of
his employment in covered industries.

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