Some Corporation		Earnings Statement
123 Somewhere Drive
Ann Arbor, MI 48104		Hope Marie Kingsley
		8670 Rogerson Drive
		Ann Arbor, MI 48104
Employee ID Number	98856
Job Title	Administrative Assistant
Social Security Number	123-45-6789
Department Number	K7890
Pay Period	4/8/2018 – 4/21/2018
Pay Date	4/27/2018
Taxable Marital Status	Married
Exemptions/Allowances
Federal	2
State	0
Earnings
Rate Hours	This Period	Year To Date
1,200.00 80	1,200.00	9,600.00
Gross Pay	1,200.00	9,600.00
Deductions
Federal Income Tax	121.99	975.92
State Income Tax	79.68	637.44
Social Security Tax	18.64	149.12
Medicare Tax	65.63	525.04
Health	76.58	612.64
Dental	26.56	212.48
Retirement*	150.00	1,200.00
Net Pay	660.92
*Excluded from federal taxable wages

*Excluded from federal and state income taxes only. Not excluded from FICA taxes.

Transcribed Image Text:

New employees rely on the payroll accounting professional to help them understand their pay check. Quite often candidates are wooed into new positions with starting salaries that seem impressive but the amount looks much smaller when divided by pay periods with taxes, insurance and retirement removed from the amount. Hope Kingsley is a somewhat new employee at Some Corporation, where she began working December 30, 2019, the first Monday of the first pay period for the year. She has just received her 8th paycheck of the year and have noticed a few issues she would like some help with. Your job is to find those mistakes, explain what the mistake actually is (i.e. tax is calculated wrong, year-to-date amounts are wrong, etc.), and fix it (i.e. calculate the correct amount of tax, include the correct date, etc.) There are a total of 10 mistakes on this paystub. Each mistake that you identify, explain, and fix, is worth 5 points, for a total possible of 50 points. Please assume that all names and addresses are correct, the Married status and the allowances for both Federal and State are correct, the fact that she worked 80 hours in the 2-week pay period is correct, and her Gross Pay for this pay period and the Year-To-Date Gross Pay is correct. The amounts deducted for Health, Dental, and Retirement are also correct for both this pay period and the Year-To-Date. The Health and Dental deductions are not exempt from any taxes and, therefore, should not be subtracted from the income before you calculate any taxes. Some Corporation pays it employees bi-weekly, with the pay period beginning on a Sunday and ending on a Saturday. The company uses the Percentage Method to calculate ALL Federal Income Tax. NOTE: You MUST use the Tax Tables provided in the textbook for the Federal Income Tax. Do NOT use an outside source. HOWEVER, you may need to do a quick Google search to verify the State Income Tax rate. The paychecks are distributed the Friday following the end of the pay period. ALL employees of the company are paid on an hourly basis. Below is the 8th paycheck of 2020 for Hope Kingsley, a brand new, hourly employee. NOTE: The format of the paystub is correct! Please do not get hung up on the wording of the items on the paystub or the format of how that information is displayed! Every company formats their paystubs a little differently! One additional mistake has been corrected for you so you can see how this assignment is supposed to be completed. Please note that the weekly amounts and the year-to-date amounts should be considered SEPARATE mistakes, not one big mistake. IMPORTANT: YOU MUST SHOW YOUR ENTIRE CALCULATIONS WHEN CORRECTING THE MISTAKES. SIMPLY GIVING YOUR UPDATED AMOUNT IS NOT ACCEPTABLE AND YOU WILL LOSE POINTS! Please review the check stub below and identify, explain, and fix the 10 mistakes: Ex.) Hourly rate is incorrect. Should be stated as earnings per hour, not total earnings for the pay period. $1,200 gross pay/ 80 hours worked = $15 correct hourly rate New employees rely on the payroll accounting professional to help them understand their pay check. Quite often candidates are wooed into new positions with starting salaries that seem impressive but the amount looks much smaller when divided by pay periods with taxes, insurance and retirement removed from the amount. Hope Kingsley is a somewhat new employee at Some Corporation, where she began working December 30, 2019, the first Monday of the first pay period for the year. She has just received her 8th paycheck of the year and have noticed a few issues she would like some help with. Your job is to find those mistakes, explain what the mistake actually is (i.e. tax is calculated wrong, year-to-date amounts are wrong, etc.), and fix it (i.e. calculate the correct amount of tax, include the correct date, etc.) There are a total of 10 mistakes on this paystub. Each mistake that you identify, explain, and fix, is worth 5 points, for a total possible of 50 points. Please assume that all names and addresses are correct, the Married status and the allowances for both Federal and State are correct, the fact that she worked 80 hours in the 2-week pay period is correct, and her Gross Pay for this pay period and the Year-To-Date Gross Pay is correct. The amounts deducted for Health, Dental, and Retirement are also correct for both this pay period and the Year-To-Date. The Health and Dental deductions are not exempt from any taxes and, therefore, should not be subtracted from the income before you calculate any taxes. Some Corporation pays it employees bi-weekly, with the pay period beginning on a Sunday and ending on a Saturday. The company uses the Percentage Method to calculate ALL Federal Income Tax. NOTE: You MUST use the Tax Tables provided in the textbook for the Federal Income Tax. Do NOT use an outside source. HOWEVER, you may need to do a quick Google search to verify the State Income Tax rate. The paychecks are distributed the Friday following the end of the pay period. ALL employees of the company are paid on an hourly basis. Below is the 8th paycheck of 2020 for Hope Kingsley, a brand new, hourly employee. NOTE: The format of the paystub is correct! Please do not get hung up on the wording of the items on the paystub or the format of how that information is displayed! Every company formats their paystubs a little differently! One additional mistake has been corrected for you so you can see how this assignment is supposed to be completed. Please note that the weekly amounts and the year-to-date amounts should be considered SEPARATE mistakes, not one big mistake. IMPORTANT: YOU MUST SHOW YOUR ENTIRE CALCULATIONS WHEN CORRECTING THE MISTAKES. SIMPLY GIVING YOUR UPDATED AMOUNT IS NOT ACCEPTABLE AND YOU WILL LOSE POINTS! Please review the check stub below and identify, explain, and fix the 10 mistakes: Ex.) Hourly rate is incorrect. Should be stated as earnings per hour, not total earnings for the pay period. $1,200 gross pay/ 80 hours worked = $15 correct hourly rate

Answer rating: 100% (QA)

To identify explain and fix the mistakes on Hope Kingsleys paystub lets go through the issues one by one 1 Mistake Incorrect Federal Income Tax Calcul... View the full answer