226 Payroll Accounting Chapter 7: Comprehensive Projects-Paper-Based Versions One-Month Project NOTE! Templates needed to complete these exercises, including one containing year-to-date payroll data, are included in the Student Exercise Files download for this course. Ellipses Corp. is a small business that operates in Herndon, VA. The company is located at 10 Period Lane, Herndon, VA 20170. Its federal Employer Identification Number is 77-7777777, and its president, who signs all tax forms, is John Parker (telephone #571-555-0073). The company does not wish to name a third-party designee on forms. During 2019 four individuals are employed by Ellipses Corp. These employees are as follows: Social Federal W/H State W/H Marital Name Address Security # Allowances Allowances Status Hunter Cranston 85 Southern Road 111-11-1111 2 2 Married Herndon, VA 20170 Allison Harrison 203A Pine Court 777-77-7777 4 3 Married Herndon, VA 20170 John Parker 212 Tradition Lane 444-44-4444 1 Single Herndon, VA 20170 Pierre Sternberg 41 Seward Boulevard 333-33-3333 2 2 Married Herndon, VA 20170 Note that Pierre Sternberg was hired in November, and his first day of work was Monday, November 25. Additionally, due to an economic downturn, Allison Harrison was laid off in mid-December, with her last day of work on Friday, December 13. All employees of Ellipses Corp. work a regular 40-hour workweek (thus all hours worked over 40 in a given week are overtime hours), receive overtime pay at a rate of 1.5 times the regular wage rate, and are paid weekly on Friday for the current week (which runs from Saturday through Friday, although employees never work on weekends). The SUTA tax rate applicable to Ellipses Corp. is 3.1%, while the SUTA wage base in Virginia is $8,000. Earnings and voluntary deduction information for each of the four employees is as follows: Regular Annual Weekly 401(k) Weekly Charitable Name Wage Rate Salary Deduction Contribution Hunter Cranston $15/hour N/A 6% of gross pay $5 Allison Harrison $23/hour N/A 5% of gross pay $5 John Parker N/A $203,000.20 N/A $20 Pierre Sternberg N/A $112,000.20 1% of gross pay N/AOne-Month Project 227 The first 11 months of the year have passed, and all payroll-related activity has been properly accounted for as of 11/30/2019. Payroll data for each of the four employees for the first three quarters of the year, as well as for the months of October and November, is as follows: Hunter Cranston Gross Federal State Social Medicare 401(k) Charitable Period Earnings Income Tax Income Tax Security Tax Tax Deduction Cont. 1st quarter $7,800 $221 $366.60 $483.60 $113.10 $468 $65 2nd quarter $7,800 $221 $366.60 $483.60 $113.10 $468 $65 3rd quarter $7,800 $221 $366.60 $483.60 $113.10 $468 $65 October $2,400 $68 $112.80 $148.80 $34.80 $144 $20 November $3,000 $85 $141 $186 $43.50 $180 $25Allison Harrison Gross Federal State Social Medicare 401(k) Charitable Period Earnings Income Tax Income Tax Security Tax Tax Deduction Cont. 1st quarter $11,960 $416 $568.10 $741.52 $173.42 $598 $65 2nd quarter $11,960 $416 $568.10 $741.52 $173.42 $598 $65 3rd quarter $11,960 $416 $568.10 $741.52 $173.42 $598 $65 October $3,680 $128 $174.80 $228.16 $53.36 $184 $20 November $4,600 $160 $218.50 $285.20 $66.70 $230 $25John Parker Gross Federal State Social Medicare 401(k) Charitable Period Earnings Income Tax Income Tax Security Tax Tax Deduction Cont. 1st quarter $50,750.05 $10,929.36 $2,537.47 $3,146.52 $735.93 $0 $260 2nd quarter $50,750.05 $10,929.36 $2,537.47 $3, 146.52 $735.93 $0 $260 3rd quarter $50,750.05 $10,929.36 $2,537.47 $1,946.76 $735.93 $0 $260 October $15,615.40 $3,362.88 $780.76 $0 $226.44 $0 $80 November $19,519.25 $4,203.60 $975.95 $0 $283.05 $0 $100228 Payroll Accounting Chapter 7: Comprehensive ProjectsPaper-Based Versions Pierre Sternberg GI'OSS Federal State SOCiai Medicare 401(K) Charitable Period Earnings Income Tax Income Tax security Tax Tax Deduction COHt. 2nd quarter so so $0 so so $0 $0 3rd quarter i so i so i so i so i so so so November $2,153.85 Note that all tax payments and lings are made on the due date. Based on the data provided here, you will complete the following: 1. Establish an employee earnings record for each of the company's four employees. Complete the top portion of each record. 228 Payroll Accounting Chapter ?: Comprehensive ProjectsPaper-Based Versions Pierre Sternberg Gross Federal State Social Medicare 401(k) Charitable Earnings Income-Tax lncomeTax SecurityTax Tax Deduction Cont. $0 $0 $0 $0 $0 $0 $0 30 1st quarter 2nd quarter $0 3rd quarter so so October $0 $2,153.85 Note that all tax payments and lings are made on the clue date. Based on the data provided here, you will complete the following: 1. Establish an employee earnings record for each of the company's four employees. Complete the top portion of each record. \\1 2. Establish and complete the payroll register for each weekly pay period during December. When calculating federal income tax withholding, use the withholding tables where possible, and refer to the percentage method only when necessary. Note that as of December 7, Hunter Cranston requests that his federal withholding allowances increase from two to three (Ellipses Corp. makes this change). Additionally, for simplicity, calculate the state income tax withholding as 5% of each employee's taxable pay (which is the same as taxable pay for FWT). Recall that state income tax withholding would ordinarily be calculated using the applicable state's withholding tables. Payroll checks are remitted to the employees in the same order (Cranston, Harrison, Parker, Sternberg) each pay period and are written from a banlt account that is used solely for these payments. The rst payroll check written in December is check #762. Note that all charitable contributions are deemed to be made on the nal day of each pay period. The following information will be required for the completion of these records for the two employees who are compensated via an hourly wage: Weekly Hours Worked Weekly Start Date Hunter Cranston Allison Harrison December 14 WARNING! The above dates are weekly start dates. Refer to a calendar to determine the weekly end dates and associated pay dates. Keep in mind that tax liability and payment amounts are determined based on the weekly pay dates. 3. Complete the employee earnings records for December for each of the four employees. Divide the voluntary deductions from the payroll register appropriately across the associated columns within the employee earnings records. If directed to do so by your instructor, record the necessary journal entries for each pay period. Three-Month Project 229 4. Complete Form 941 for the 4th quarter. Note that based on the lookback period, the company is a monthly depositor. Assume that all necessary deposits were made on a timely basis and that the employer made deposits equal to the total amount owed for the quarter. Although Virginia quarterly state payroll forms are also led by Ellipses Corp., you will not complete these. If directed to do so by your instructor, record the necessary journal entries associated with Form 941 (including those required for any tax payments made). NOTE! Recall from the Form 941 Rounding Considerations section that quarter and year-end tax gures should not be calculated based on the total taxable earnings for the respective quarter or year. Instead. to avoid rounding discrepancies, tax gures within Part 2 of Form 941 should be determined for each employee by adding the individual taxes across each pay period. 5. Complete Form 940 for Ellipses Corp. Note that FUTA payments are made only when required (i.e.. if the employer is permitted to postpone the payment of these taxes, it will do so until a point in time when payment must be remitted). If directed to do so by your instructor, record the necessary journal entry associated with Form 940. 6. Calculate total SUTA tax owed by the employer. Although Ellipses Corp. will file state forms in which this figure is reported, you are required to calculate only the total amount owed for the year. 7. Complete Copy A of Form W-2 for each of the four employees. State wages were the same as federal wages subject to federal withholding tax for each of the four employees, and the state identification number for Ellipses Corp. is the same as its federal Employer Identification Number. 8. Complete Form W-3 for Ellipses Corp. Note that the company files the paper version of the form and selects "None apply" in the Kind of Employer