The Comprehensive Payroll Project reinforces the concepts covered in this class. In this assignment you will compute
Question:
The Comprehensive Payroll Project reinforces the concepts covered in this class. In this assignment you will compute earnings, payroll deductions, payroll tax expense, prepare accounting entries and payroll reports and forms. This project is extensive and time consuming and will be completed Modules 8 and 9.The Company On October 1, Lolita L. Lovely established a hair salon which she named Lolita’s Lovely Locks. Her business is organized as a corporation. The business provides haircuts, hair styling, and hair grooming for both men and woman. Company Address:8500 Dodge St. Omaha, NE 68105Tax Identification Federal Tax Id: 47-3882497Nebraska State ID: 123456Employees and Employee Benefits Including herself, Lolita has three paid employees. Lolita pays herself a salary. Her two other employees are paid hourly. The employee earnings records have the payment details including pay rates, withholding allowances, and identification information. Employees have the option to contribution into a Pay flex FSA account. Their elections are noted on the Employee Earnings Record. All employees are required to contribute 3% into a 401(k) retirement account. Unemployment Tax Rates Nebraska Unemployment tax rate 5.4% on the first $9,000 of earnings. Federal Unemployment tax rate 0.6% on the first $7,000 of earnings. Transactions and Requirements1. Complete the Earnings Records and Payroll Registers Calculate the earnings, deductions and net pay for each employee. Use the income tax withholding tables included with your text. Use the wage bracket (table method) to compute income tax withholding. Calculate and enter the deduction for State withholding assuming that the State income tax withholding is equal to 15% of the Federal income tax withholding.
Comprehensive Payroll October Salary & Wage Information Employees Paid Hourly Regular Overtime Hours Linda A. Osborne16816Kathryn B. Jones168 4Salaried Employee: Lolita L. Lovely$4,000 per Month November Salary & Wage Information Employees Paid Hourly Regular Overtime Hours Linda A. Osborne16024Kathryn B. Jones160 0Salaried Employee Lolita L. Lovely$4,000 per Month December Salary & Wage Information Employees Paid Hourly A. Osborne168 8Kathryn B. Jones120 2Salaried EmployeeLolita L. Lovely$4,000 per Month2. Prepare and post Journal entries. For the transactions listed below, prepare appropriate journal entries and post the entries to the appropriate general ledger accounts.OctoberOct 31Journalize and post the entry to record the October payroll. Your entry should include: Salaries & Wages Expense, all of the related deductions, and a credit to cash for the net pay.Oct 31Journalize and post the entry to record the employer’s payroll tax expense for the month of October. Your entry should include payroll tax expense and separately identified amounts for each payroll tax liability item.
Comprehensive Payroll Project3 | P a g eNovember Nov 10Journalize and post the entry to record the payment (deposit) of the Federal Income tax, Social Security tax, and Medicare tax. Your entry should include both the employee and employer’s share of Social Security taxes and Medicare taxes.Nov 30Journalize and post the entry to record the November payroll. Your entry should include: Salaries & Wages Expense, all of the related deductions, and a credit to cash for the net pay.Nov 30Journalize and post the entry to record the employer’s payroll tax expense for the month of November. Your entry should include payroll tax expense and separately identified amounts for each payroll tax liability item.December Dec 10Journalize and post the entry to record the payment (deposit) of the Federal Income tax, Social Security tax, and Medicare tax. Your entry should include both the employee and employer’s share of Social Security taxes and Medicare taxes.Dec 30Journalize and post the entry to record the December payroll. Your entry should include: Salaries & Wages Expense, all of the related deductions, and a credit to cash for the net pay.Dec 30Journalize and post the entry to record the employer’s payroll tax expense for the month of December. Your entry should include payroll tax expense and separately identified amounts for each payroll tax liability item.3. Prepare Payroll Tax Reports Prepare the quarterly and annual payroll tax reports indicated below. The source of the information for these reports is the employee earnings records, the journal entries, and the general ledger accounts. Some of the identifying information has been entered on the form. However, carefully review each form and make sure all necessary identifying information is entered on all forms.(1) Prepare the federal Form 941: Employer’s quarterly federal return for the quarter ended December 31. You should assume that the December taxes will be deposited on January 10 of the following year. Therefore,
Comprehensive Payroll Project4 | P a g ethe total tax liabilities and the total deposits should be the same amount. Be sure to fill in all information and answer all applicable questions.(2)Prepare the employer’s quarterly Nebraska unemployment tax return for the quarter ended December 31. Also prepare the Nebraska wage report. (Form UI-11T and UI-11W)(3)Prepare the federal Form 940: Employer’s annual federal unemployment form for the year ended December 31. Part 3 can be left blank as there are no adjustments. The unemployment taxes will be deposited on January 20.(4)Prepare a Form W-2 for each employee for the year ended December 31. Be sure to fill in all appropriate amount boxes and identification boxes. (5)Prepare a Form W-3: Transmittal of Wage and Tax Statements for the company.Electronic FilesFile NameWhat you will findFile 1 Project NarrativeThis file is the starting point for the project. You are already here! As you have seen, this provides the detail of the project.File 2 Payroll Accounting formsThis file has all of the accounting forms. Tabs at the bottom of the worksheet allow you to switch between forms. The earnings records, payroll registers, general journal, general ledger, and trial balance forms are all contained in this file. File 3 Form 941Federal Form 941: Employer’s quarterly federal tax returnFile 4 NE Unemployment ReportsNebraska unemployment tax form (Combined Tax Report UI-11T and UI-11W)File 5 Form 940Federal Form 940: Annual Unemployment Tax ReturnFile 6 Form W-2Form W-2s for each employeeFile 7 Form W-3Form W-3: Transmittal of Wage and Tax Statements