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payroll accounting 2018

Payroll Accounting 2024 10th International Edition Jeanette Landin, Paulette Schirmer - Solutions

2. The post reference for the June 30 journal entry is J34. What does this post reference mean?
1. Does the payment of employee wages increase or decrease the profitability of a business?
2. Why is it important to allocate payroll-related expenses properly?
1. Which of the following reports are affected by the payroll of an organization?a. Trial balanceb. Statement of owners’ equityc. Interest statementd. Income statemente. Balance sheet
2. What is a specific type of report that the payroll accountant provides to managerial staff?
3. What are trend reports?
4. How much should each employee be paid?
1. What types of accounts does a debit increase?
2. What types of accounts does a credit increase?
3. Where are the first accounting entries recorded?
4. Once recorded, where are the entries posted?
5. What is the purpose of the payroll register?
8. What type of account is debited for the gross pay?
10. What two accounts are affected upon issuance of paychecks?
11. What accounts are debited and credited for the employer’s share of the payroll expenses?
12. How do payroll expenses affect the income statement and balance sheet?
14. How can a company’s payroll information contained in financial reports assist in corporate planning?
15. How do the payroll register and employees’ earnings records help employers meet their responsibilities to different groups, such as the employees and governmental agencies?
16. What is the term for the responsibility that employers have for payroll deductions under ERISA?
LO 7-1 Which column exists in the employees’ earnings records but not in the payroll register?a. Gross payb. Net payc. YTD net payd. 401(k) contributions
LO 7-1 What is the connection between the employees’ earnings records and payroll tax reporting? (Select all that apply.)a. Employees’ earnings records do not connect with payroll tax reporting.b. Employees’ earnings records may be used to ensure the accuracy of payroll tax reporting.c.
LO 7-2 A credit increases which of the following types of accounts? (Select all that apply.)a. Liabilitiesb. Expensesc. Revenuesd. Assets
LO 7-3 Which amounts on the payroll register reduce federal withholding tax but are not deducted for FICA tax computations? (Select all that apply.)a. Charitable contributionsb. Nonqualified pre-tax insurancec. Retirement plan (e.g., 401(k)) contributionsd. Garnishments
LO 7-4 What is always true about the General Ledger? (Select all that apply.)a. The process of transferring amounts from the General Journal to the General Ledger is called posting.b. The General Ledger is a way to represent monthly groupings of entire General Journal entries.c. The General Ledger
How does a payroll accountant use the information in the General Ledger?(Select all that apply.)a. The account balances form the basis for accounting reports.b. The payroll accountant uses General Ledger balances to determine the effectiveness of individual employees.c. General Ledger account
LO 7-6 Which of the following accounts would appear on the balance sheet?(Select all that apply.)a. Payroll taxes expenseb. 401(k) contributions payablec. 401(k) employer contributions expensed. Social Security tax payable
What is always true about the income statement? (Select all that apply.)a. Only accounts with balances at the end of the period are included.b. All income and expense accounts are included in the report.c. All liabilities are included in the report.d. The report is prepared for a single date.
The purpose of a labor report is to do what? (Select all that apply.)a. Report an individual employee’s regular time and overtime.b. Reflect all expenses of a firm.c. Promote analysis of payroll expenses.d. Update managers about payroll on a daily basis.
LO 7-1 Harper Morgan owns White Mountain Assessments in Laconia, New Hampshire. The standard workweek is 40 hours. For the weekly payroll ending September 8, 2023, disbursements dated September 13, 2023, complete the payroll register. Use the wage-bracket method in the federal tax table from
LO 7-1 The employee earnings record for Lyric Crosby of White Mountain Assessments is listed below. Record the earnings from the September 8 weekly pay in P7-1A. EMPLOYEE EARNING RECORD NAME ADDRESS CITY/STATE/ZIP Lyric Crosby Hire Date April 1, 2018 Dependent child
LO 7-2, 7-3 Using the payroll register from P7-1A for White Mountain Assessments, complete the General Journal entry for the employees’ pay for the September 8 pay date. Paychecks will be issued on September 13. Date Description Post Ref. Debit Credit 1 3 st 4 10 5 6 7 8 00 9 10 11 12 1234567 8
LO 7-2, 7-3 Using the payroll register from P7-1A for White Mountain Assessments, complete the General Journal entry for the employer’s share of the payroll taxes for the September 8 payroll end date. Assume 5.4 percent SUTA and 0.6 percent FUTA tax rates and that only $3,542.50 is subject to
LO 7-2, 7-3 Using the employee payroll entry from P7-3A, post the September 8 employee pay for White Mountain Assessments to the selected General Ledger accounts shown next. This will have a Posting Reference of J4. Balance Post Date Description Ref. Debit Credit Debit Credit 1 2 Account: Salaries
LO 7-2, 7-3 Using the employee payroll entry from P7-3A, complete the General Journal entry for the issuance of the pay for the September 8 payroll end date. The date of the checks is September 13, 2023. Date Description Post Ref. Debit Credit 1 1 23 45 2345
LO 7-2, 7-3, 7-4 Using the employer payroll entry from P7-4A, post the employees’ share of the Social Security and Medicare taxes along with the employer’s share of payroll taxes for September 8 pay at White Mountain Assessments to the appropriate General Ledger accounts. Account: Social
LO 7-2, 7-3 KMH Industries is a monthly schedule depositor of payroll taxes. For the month of August 2023, the payroll taxes (employee and employer share combined) were as follows:Social Security tax: $3,252.28 Medicare tax: $760.61 Employee federal income tax: $2,520.00 Create the General Journal
LO 7-2, 7-3 Oakley Breeders has the following voluntary withholdings to remit:AFLAC payable: $560.00 401(k) payable: $1,280.00 Garnishments payable: $375.00 United Way contributions payable: $200.00 Create the General Journal entry on June 9, 2023, for the remittance of these withheld amounts. Date
LO 7-5, 7-6 Brighton Rowe is the payroll accountant for Great Lake Lamps. The company’s management has requested an analysis of the payroll effects on the expenses of the company. Explain which accounting report(s) Brighton would use to construct the analysis. How would Brighton explain the
LO 7-6 The new vice president of marketing for your company has asked to meet with you regarding the purpose and location of payroll entries in accounting reports. What is your response to the vice president?
LO 7-1 Which of the following exists in both the employees’ earnings records and the payroll register? (Select all that apply.)a. Employee birthdateb. Social Security numberc. Hourly rate or period waged. Employee name
LO 7-2 Which of the following are categories contained in the fundamental accounting equation? (Select all that apply.)a. Liabilitiesb. Revenuesc. Expensesd. Owners’ equity
LO 7-2 Which of the following principles are always true about financial accounting?(Select all that apply.)a. Transactions are posted first to the General Ledger.b. Debits = Credits.c. Each transaction involves at least two accounts.d. The balance sheet contains all accounts.
LO 7-3 What is true about expenses and liabilities? (Select all that apply.)a. Expenses usually have the word “expense” in the account title.b. Expenses represent additional sums earned by the company.c. Liabilities represent sums of money owed by third parties to the company.d. Liabilities
LO 7-3, 7-4, 7-5 How do payroll-related expenses affect financial statements? (Select all that apply.)a. Payroll expenses may be allocable to work performed for a firm’s vendors.b. Payroll expense accounts are reported on the income statement.c. The period’s gross earnings are reported on the
LO 7-6 Which of the following payroll-related accounts appear on the balance sheet? (Select all that apply.)a. Wages and salaries payableb. Medicare tax expensec. Employee federal income tax payabled. FUTA tax expense
LO 7-2, 7-5 What is the purpose of payroll-related accrual and reversal entries on financial statements? (Select all that apply.)a. Accrual entries represent payroll amounts incurred but not yet paid.b. Reversing entries represent the disbursement of accrued payroll prior to the end of the payroll
LO 7-6 Managers use labor reports to do which of the following? (Select all that apply.)a. Analyze labor trendsb. Determine staffing needsc. Ensure FLSA wage and hour complianced. Formulate strategic plans for the company
LO 7-5, 7-6 To which parties does an employer have a fiduciary duty when it incurs payroll liabilities? (Select all that apply.)a. Customersb. Employeesc. Governmentd. Vendors
LO 7-1 Nat Crossman owns Appalachian Limited Home Design in Versailles, Kentucky. Complete the payroll register for the weekly payroll dated March 10, 2023. Checks will be issued on March 15, 2023. Use the wage-bracket method in the federal tax table in Appendix C. Assume 5 percent state income
LO 7-1 The employee earnings record for Carson Ito of Appalachian Limited Home Design follows. Record the earnings during the March 10, 2023, pay period from P7-1B. NAME ADDRESS CITY/STATE/ZIP TELEPHONE Carson Ito Hire Date 7/1/2018 EMPLOYEE EARNINGS RECORD Dependents
LO 7-1, 7-2, 7-3 Using the payroll register from P7-1B for Appalachian Limited Home Design, complete the General Journal entry for the employees’ pay for the March 10, 2023, payroll end date. Employees’ paychecks will be issued on March 15. Date Description Post Ref. Debit Credit 1 2 3 4 56 789
LO 7-1, 7-2, 7-3 Using the payroll register from P7-1B for Appalachian Limited Home Design, complete the General Journal entry for the employer’s share of the payroll taxes for the March 10, 2023, pay date. Assume a 5.4 percent SUTA rate and 0.6 percent FUTA rate, and assume that only $2,721.85
LO 7-3, 7-4 Using the employee payroll entry from P7-3B, post the March 10 employee payroll end date for Appalachian Limited Home Design to the selected General Ledger accounts. The Posting Reference will be J1. Account: Salaries and Wages Payable Balance Post Date Description Ref. Debit Credit
LO 7-3, 7-4 Using the employee payroll entry from P7-3B, complete the General Journal entry for the issuance of Appalachian Limited Home Design pay on March 15, 2023. Date Description Post Ref. Debit Credit 1 2345 1234 5
LO 7-3, 7-4 Using the employer payroll entry from P7-4B, post the employer’s share of payroll taxes for the March 10 pay period at Appalachian Limited Home Design to the appropriate General Ledger accounts. Employees are paid weekly. Assume a 5.4 percent SUTA rate and 0.6 percent FUTA rate, and
LO 7-2, 7-3 Legends Leadworks is a monthly schedule depositor of payroll taxes. For the month of April 2023, the payroll taxes (employee and employer share)were as follows:Social Security tax: $5,386.56 Medicare tax: $1,259.76 Employee federal income tax: $4,978.00 Create the General Journal entry
LO 7-2, 7-3 Candy Café has the following voluntary withholdings to remit as of September 30, 2023:AFLAC payable: $687.00 Workers’ compensation insurance payable: $1,042.00 401(k) contributions payable: $2,104.00 Garnishments payable: $450.00 U.S. savings bonds payable: $200.00 Create the General
LO 7-5, 7-6 Pax Martinson is the controller for HHT Industries. Pax has been asked to explain the payroll accounts on the financial statements for the preceding month. What information is available about payroll on the financial statements?
LO 7-5, 7-6 You are interviewing for a position with Limelight Photography. The president of the company asks you to explain how payroll is both an expense and a liability of the company. How will you answer?
7-1. Your boss asks you for a five-year labor cost trend chart. The labor costs per year are as follows:2019 $175,248 2020 165,225 2021 151,250 2022 170,312 2023 161,344 Construct a line chart to depict the data. What conclusions can you derive from the data about labor costs and trends over the
7-2. Giblin’s Goodies pays employees weekly on Fridays. However, the company notices that May 31 is a Wednesday, and the pay period will end on June 2. The payroll data for May 30–31 is as follows:Gross pay: $4,500.00 Federal income tax: $520.00 Social Security tax: $279.00 Medicare tax: $65.25
1. Should the insurance be excluded when calculating federal and state taxable wages? FICA taxable wages?
2. Should the 401(k) be excluded when calculating federal and state income taxable wages? FICA taxable wages?
1. What is the purpose of the Current Taxable for FUTA column?
2. What is the purpose of the Dependent information?
3. Explain the employer’s role in the collection and remittance of payroll withholdings for taxes, insurance, and 401(k) plans.
4. When employers pay under a semimonthly cycle, there can be more than 10 days in the pay period. For the first December pay period, how many hours are available under regular hours? How would you keep track of the number of hours in a pay period under the semimonthly cycle?
5. There are two typical ways of handling accruals in the following period:reversing the accrual in total or adjusting the accrual for the actual amount.What are the benefits of each method?
Compute the net pay for Briar Khan and Hollis Hart. Assume that they are paid a $2,500 salary biweekly, subject to federal income tax (use the wagebracket method) in Appendix C and FICA taxes and have no other deductions from their pay. They have a state tax rate of 3 percent. If they choose to
LO 5-1, 5-2, 5-3, 5-5 Enlightened Eats in Anchorage, Alaska, has six employees who are paid semimonthly. Calculate the net pay from the information provided here for the November 15 pay date. Assume that all wages are subject to Social Security and Medicare taxes. All 401(k) and Section 125 amounts
The following salaried employees of Mountain Stone Brewery in Fort Collins, Colorado, are paid semimonthly. Some employees have union dues or garnishments deducted from their pay. Calculate their net pay using the percentage method for manual payroll systems with Forms W-4 from 2020 or later in
LO 5-1, 5-2, 5-3, 5-4, 5-5 Lexington is the payroll accountant at All’s Fair Gifts. The employees of All’s Fair Gifts are paid semimonthly. Asa comes to Lexington on April 7 and requests a pay advance of $1,000, which Asa will pay back in equal parts on the April 14 and May 15 paychecks. Asa is
LO 5-1, 5-2 Milligan’s Millworks pays its employees weekly. Use the wage-bracket tables from Appendix C to compute the federal income tax withholdings for the following employees of Milligan’s Millworks. Assume that no pre-tax deductions exist for any employee, box 2 is not checked for all
5-3 Compute the net pay for Merritt Gamal and Cove Green. Assume that they are paid biweekly, subject to federal income tax (use the wage-bracket method in Appendix C) and FICA taxes, and have no other deductions from their pay. Merritt’s deduction with participation in the cafeteria plan is
Teton Tours in Evanston, Wyoming, has six employees who are paid on a biweekly basis. Calculate the net pay from the information provided for the July 14 pay date. Assume that all wages are subject to Social Security and Medicare taxes. Use the wage-bracket tables in Appendix C to determine the
LO 5-1, 5-2, 5-3, 5-4, 5-5 The following employees of Concordian Construction of Walla Walla, Washington, are paid biweekly. Some employees have union dues or garnishments deducted from their pay. Calculate their net pay. Use the percentage method for manual payrolls with Form W-4 from 2020 or
LO 5-1, 5-2, 5-3, 5-4, 5-5 You are the payroll accountant for Multi Winds Energy of Cornelius, North Carolina, whose employees are paid biweekly. An employee, Larson, comes to you on September 14 and requests a pay advance of $1,000, which will be paid back in equal parts on the September 22 and
LO 5-2 Wolfe Industries pays its employees on a semimonthly basis. Using the wage-bracket tables in Appendix C, compute the federal income tax deductions for the following employees of Wolfe Industries. No information was included in Step 4 of any W-4; McCollum checked the box in Step 2c. Assume
LO 5-3 The employees of Lillian’s Interiors are paid on a semimonthly basis.Compute the FICA taxes for the employees for the December 29, 2023, pay period. All employees are single and have been employed for the entire calendar year. YTD Pay for Semimonthly Dec. 15 Pay Social Security Tax Dec. 29
LO 5-4 Christensen Ranch operates in Pennsylvania. Calculate the state income tax for each employee using the state income tax rate of 3.07 percent.Assume that no pre-tax deductions exist for any employee. Employee G. Zonis V. Sizemore R. Dawson C. Couture Amount per Pay Period $1,325 1,710 925
5.5 For the February 10, 2023, pay period, use the gross pay totals from the end of Chapter 3 to compute each employee’s net pay. Once you have computed the net pay (use the wage-bracket tables in Appendix C), the state withholding tax for Vermont is computed at 3.35 percent of taxable wages
5-3. Would you like to preview employee apps used to enter time and calculate payroll disbursements? Check out these links:DOL Timesheet: https://itunes.apple.com/us/app/dol-timesheet/id433638193?mt=8 Intuit payroll: https://payroll.intuit.com/additional-services/mobile-payroll-apps/Sure payroll:
5-2. Want to know more about the concepts in this chapter? Check out these sites:https://www.irs.gov/pub/irs-pdf/p15t.pdf www.americanpayroll.org/Visa-Paycard-Portal/
5-1. Did you know that you can use an online calculator to see how your voluntary deductions will affect your paycheck? Many different payroll calculators exist. Go to one or more of the following sites and use the payroll calculator:www.paycheckcity.com/www.surepayroll.com/resources/calculator
5-2. Your boss approaches you in mid-December and requests that you pay certain employees their gross pay amount as if there were no deductions as their year-end bonuses. None of the employees have reached the Social Security wage base for the year, and the company pays semimonthly. What is the
5-1. Arden, an employee of Sweet Shoppe Industries, receives a bonus of $5,000 for stellar work this period. Arden’s boss wants the net check to be $5,000. Arden contributes 3 percent to a pre-tax 401(k) deduction. Calculate the gross pay amount that would result in $5,000 paid to Arden.
LO 5-6 You have been retained as a consultant for Marionet Industries. The company has had difficulty with its cross-country drivers receiving their pay in a timely manner because they are often away from their home banks. The company is looking at options that offer its employees flexibility in
LO 5-6 You are preparing a training session for your colleagues about payroll check fraud. Which of the following may be indicators of check fraud? (Select all that apply.)a. Changes in font type between company address and employee name.b. Company logo on the face of the check.c. The check number
LO 5-4 Which of the following is(are) true about child support garnishments? (Select all that apply.)a. They are based on gross pay.b. The garnishment may be as high as 65 percent.c. Only the minimum wage amount of an employee’s pay is subject to garnishment.d. Title III of the CCPA protects
LO 5-6 Which of the following is(are) true about employee pay methods? (Select all that apply.)a. Employees must be able to access the full amount of their net pay on the pay date.b. Employers must keep a record of all pay disbursements.c. Employees do not need to own a bank account to receive
LO 5-4 Which of the following is(are) true about state and local income tax? (Select all that apply.)a. Pre-tax deduction rules for federal income tax are generally the same for state and local income taxes.b. Nine states do not have a personal income tax on earnings.c. All localities levy income
LO 5-3 Scout is the vice president for marketing at Sun Field Industries, earns$175,000 annually, and is paid on a semimonthly basis. As of November 15, Scout has year-to-date earnings of $153,125. The Social Security wage base is $160,200. What is the maximum amount of taxable earnings that may be
LO 5-2 Which of the following are steps in computing federal income tax withholding using the percentage method? (Select all that apply.)a. Compute and record dependents.b. Apply the tax rate to the taxable portion of the earnings.c. Determine if the employee is exempt or nonexempt.d. Add the
LO 5-2 Lux of Trade Secrets Importing is preparing payroll taxes manually. As Lux prepares to use the wage-bracket tables to determine federal income tax withholdings for each employee, which information should be available?(Select all that apply.)a. Filing statusb. Job titlec. Year-to-date
LO 5-1 The payroll accountant has received a court order for garnishment for an employee’s student loan payments. What must be considered in computing the garnishment? (Select all that apply.)a. Year-to-date payb. Hourly wagec. Disposable incomed. Pay frequency
LO 5-6 You are the new accountant for a start-up company, Peaceful Skunk Builders.The company has cross-country drivers, warehouse personnel, and office staff at the main location. The company is looking at options that allow its employees flexibility in receiving their pay. You have been asked to
LO 5-4 Fannon’s Chocolate Factory operates in North Carolina. Calculate the state income tax for each employee using the state income tax rate of 4.75 percent.Assume that no pre-tax deductions exist for any employee.Employee Amount per Pay Period North Carolina Income Tax K. Jamieson $ 550 D.
LO 5-3 The employees of Ethereal Bank are paid on a semimonthly basis.Compute the FICA taxes for the employees for the November 30 payroll.All employees have been employed for the entire calendar year. All employees are single. There are no pre-tax deductions.Employee Semimonthly Pay YTD Pay for
LO 5-3 At what income level do many employees contribute an additional percentage to their Medicare tax deduction?a. $150,000b. $160,200c. $175,000d. $200,000
LO 5-2 What are the two methods payroll accountants use to determine federal income tax withholding amounts? (Select all that apply.)a. Percentage methodb. Salary-bracket methodc. Wage-salary methodd. Wage-bracket method

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