After several years of designing and selling her own stationery, Susan has decided to expand her stationery company by moving into a large building and hiring staff. Operating under the banner of Susan Bradford Watts Designs, Susan will hire an office manager, two customer service representatives, two pressmen, a typesetter, and three employees to handle shipping and warehouse operations.

Susan's office manager, Janet, is very experienced in many fields, including accounting.

Previously, she worked as a payroll coordinator for a much larger company, handling payroll for over 50 employees. But since Susan Bradford Watts Designs is new to payroll, she and Susan will need to work together to develop procedures for making sure that the company's nine employees are paid promptly and correctly.

Answer the following questions about establishing procedures for payroll.

 

1. Describe some of the information that Susan and Janet will be required to track on the company's employees.

2. Why is payroll organization important to a company from a legal standpoint?

3. How does payroll organization benefit a company's accounting department?

4. What rules do Susan and Janet need to follow in order to comply with the regulations of the Fair Labor Standards Act (FLSA) where payroll is concerned?

At first, Susan and Janet do most of the work themselves or hire contractors to help while they seek out the most qualified employees. After Susan brings Janet on board, the second person hired to the payroll is Marshall Poe, a typesetter. Marshall is hired to work 30 hours a week and is paid an hourly wage of $17.50 an hour. He is paid on a weekly basis and does not receive health insurance or retirement benefits.
When Marshall receives his first paycheck, he has $87.00 withheld for federal tax and $23.20 for state tax. Complete this pay stub for Marshall Poe.

Now, enter Marshall's information in the payroll register.

Enter Marshall's information in the Employee Earnings Record.

Finally, journalize the business's payroll tax expenses for Marshall and post to the general ledger.

 Prior to hiring Marshall, Susan Bradford Watts Design had recorded $1,000,000 worth of total expenses and $100,000 worth of net income. Analyze the impact of the salary expenses and payroll tax expenses of Marshall's first week of pay on the company's total expenses and net income. What is the updated total for each of these quantities? Why? Include an explanation of how a well-organized system of payroll can be important in preventing or solving accounting problems and make informed decisions based on your analysis.

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Susan Bradford Watts Design 123 Everyday Street McMinnville, TC 00000 Employee Name: Marshall Poe Social Security No. 000-11-4444 Income Regular Rate YTD Net Pay Pay Period 1/23-1/30 Hours Gross Total TOTAL Pay Date 1/31 Deductions FICA - Medicare FICA - Social Security Federal Tax State Tax Deductions Employee No. 0002 Total Net Pay YTD Susan Bradford Watts Design 123 Everyday Street McMinnville, TC 00000 Employee Name: Marshall Poe Social Security No. 000-11-4444 Income Regular Rate YTD Net Pay Pay Period 1/23-1/30 Hours Gross Total TOTAL Pay Date 1/31 Deductions FICA - Medicare FICA - Social Security Federal Tax State Tax Deductions Employee No. 0002 Total Net Pay YTD

Answer rating: 100% (QA)

Information to Track on Employees Personal information name address social security number Employment status fulltime parttime temporary Hours worked ... View the full answer