ACCT 2101 - Fall 2019 Comprehensive Problem 4-2 On January 1, 2019, John Smith launched a computer services company. Technology Business Solutions (TBS), that is organized as a corporation and provides consulting services, computer system installations, and custom program development. Smith adopts the calendar year for reporting purposes. Technology Business Solutions does not use reversing entries and, therefore, al revenue and expense accounts have zero beginning balances as of June 1, 2019 Hours Rate wa In June, the sixth month of operation, the following payroll transactions took place: YTD June Cumulative June Pay Earnings as of Name Worked Pay Per May 31, 2019 Blair, L $12 hour $2,000.00 Dill, $1,000 month $1,500.00 Downer, n/a $950 month $2,500.00 Hern, R. 170 hour $120.00 Mill, n/a $950 month $1,200.00 Troup, P. 130 $10 hour $1,400.00 Wando, $8 hour $180.00 Will, A. n/a $1,200 month $1,100.00 Additional information is as follows: 59 1. A normal work month is 160 hours. Any time over 160 hours is paid at 150% of the normal hourly rate. 2. The employee's state income tax withholding is at a rate of 6.0% and federal income tax withholding is at a rate of 7.5% 3. Gross pay is subject to social security taxes at a 6.2% rate, on an annual limit of $118,500 Medicare taxes are 1.45% of gross earnings. These taxes are matched by the employer. No one had earned more than $118.500 during the months leading up to December 4. TBS has 100% participation in a $2.25 per month employee charitable contribution program. These contributions are withheld from the employee's monthly pay. 5. TBS pays workers' compensation insurance at a rate of 2.3% of gross pay. None of this cost is paid by the employee 6. TBS provides employees with health insurance, however the cost is fury paid by the employees. All employees enrol in the health insurance. The rate is 5222 per month, per employee. 7. TBS's payroll is subject to federal (0.8%) and state (2.65%) unemployment taxes on the first $7,000 of each employee's gross pay. 8 TBS contributes 3.20% of gross pay for each employee to a retirement account. Employees do not contribute to this plan. Requirements: 1. Complete a payroll register by calculating gross pay, all payroll deductions and net pay per employee and in total as shown below. Federal Social State Gross Income Security Income Charitable Health Net Name Earnings Tax Tax Medicare Tax Contributions Insurance Earnings 2. Calculate all employer related payroll expenses as well (a similar form could be used) 3. Prepare all necessary payroll related journal entries and the related payroll expenses as of June 30. The payroll for June will be paid on July 5. Prepare your journal entries in total only do not prepare a journal entry for each employee) Technology Business Solutions 4. Post your journal Unadjusted Trial Balance entries to t-accounts 30 Jun 19 5. Prepare the adjusted 45. 167.00 trial balance by posting Accounts Receivable 21.250.00 Allowance for Bad Debt the payroll journal Prepaid Rent entries/t-account 825.00 Prepaid insurance 1,11000 balances to the trial Computer Supplies Inventory 1.10 balance given for June Merchandise inventory 30 here. Estimated Returns inventory 120.00 Office Equipment 3.000.00 6. Prepare a multi-step Accumulated Depreciation 800.00 income statement for Computer Equipment 20,000.00 Accumulated Depreciation 2.500 TBS for the month Accounts Payable 116000 ended June 30 Refunds Payable 281.54 Unearned Revenge 7. Prepare a balance Retained Earnings 8.952.00 sheet in classified form Common Stock 73.000.00 for TBS at June 30 Dividends Computer Services Revere 14.350.00 Sales Revenue 11.400.00 Cost of Goods Sold 5,950.00 Depreciation expense-Office equipment 133.00 Depreciation expense-Computer equipment 417.00 Insurance Exp 185.00 Rent Expense Computer Supplies Expense 1132.00 Advertising Expense 3409 Mileage Expense Miscellaneous Expense 85.00 Repairs Experre 465 54 tad Debt Expense 207.00 192.00 112,982.54 112,987 54 ACCT 2101 - Fall 2019 Comprehensive Problem 4-2 On January 1, 2019, John Smith launched a computer services company. Technology Business Solutions (TBS), that is organized as a corporation and provides consulting services, computer system installations, and custom program development. Smith adopts the calendar year for reporting purposes. Technology Business Solutions does not use reversing entries and, therefore, al revenue and expense accounts have zero beginning balances as of June 1, 2019 Hours Rate wa In June, the sixth month of operation, the following payroll transactions took place: YTD June Cumulative June Pay Earnings as of Name Worked Pay Per May 31, 2019 Blair, L $12 hour $2,000.00 Dill, $1,000 month $1,500.00 Downer, n/a $950 month $2,500.00 Hern, R. 170 hour $120.00 Mill, n/a $950 month $1,200.00 Troup, P. 130 $10 hour $1,400.00 Wando, $8 hour $180.00 Will, A. n/a $1,200 month $1,100.00 Additional information is as follows: 59 1. A normal work month is 160 hours. Any time over 160 hours is paid at 150% of the normal hourly rate. 2. The employee's state income tax withholding is at a rate of 6.0% and federal income tax withholding is at a rate of 7.5% 3. Gross pay is subject to social security taxes at a 6.2% rate, on an annual limit of $118,500 Medicare taxes are 1.45% of gross earnings. These taxes are matched by the employer. No one had earned more than $118.500 during the months leading up to December 4. TBS has 100% participation in a $2.25 per month employee charitable contribution program. These contributions are withheld from the employee's monthly pay. 5. TBS pays workers' compensation insurance at a rate of 2.3% of gross pay. None of this cost is paid by the employee 6. TBS provides employees with health insurance, however the cost is fury paid by the employees. All employees enrol in the health insurance. The rate is 5222 per month, per employee. 7. TBS's payroll is subject to federal (0.8%) and state (2.65%) unemployment taxes on the first $7,000 of each employee's gross pay. 8 TBS contributes 3.20% of gross pay for each employee to a retirement account. Employees do not contribute to this plan. Requirements: 1. Complete a payroll register by calculating gross pay, all payroll deductions and net pay per employee and in total as shown below. Federal Social State Gross Income Security Income Charitable Health Net Name Earnings Tax Tax Medicare Tax Contributions Insurance Earnings 2. Calculate all employer related payroll expenses as well (a similar form could be used) 3. Prepare all necessary payroll related journal entries and the related payroll expenses as of June 30. The payroll for June will be paid on July 5. Prepare your journal entries in total only do not prepare a journal entry for each employee) Technology Business Solutions 4. Post your journal Unadjusted Trial Balance entries to t-accounts 30 Jun 19 5. Prepare the adjusted 45. 167.00 trial balance by posting Accounts Receivable 21.250.00 Allowance for Bad Debt the payroll journal Prepaid Rent entries/t-account 825.00 Prepaid insurance 1,11000 balances to the trial Computer Supplies Inventory 1.10 balance given for June Merchandise inventory 30 here. Estimated Returns inventory 120.00 Office Equipment 3.000.00 6. Prepare a multi-step Accumulated Depreciation 800.00 income statement for Computer Equipment 20,000.00 Accumulated Depreciation 2.500 TBS for the month Accounts Payable 116000 ended June 30 Refunds Payable 281.54 Unearned Revenge 7. Prepare a balance Retained Earnings 8.952.00 sheet in classified form Common Stock 73.000.00 for TBS at June 30 Dividends Computer Services Revere 14.350.00 Sales Revenue 11.400.00 Cost of Goods Sold 5,950.00 Depreciation expense-Office equipment 133.00 Depreciation expense-Computer equipment 417.00 Insurance Exp 185.00 Rent Expense Computer Supplies Expense 1132.00 Advertising Expense 3409 Mileage Expense Miscellaneous Expense 85.00 Repairs Experre 465 54 tad Debt Expense 207.00 192.00 112,982.54 112,987 54