Lolita$$s Lovely Locks

Comprehensive Payroll Project

Project Narrative

Module $8$ Instructions

Introduction

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 in two parts in Modules $8$ and $9.$

$$ In Module $8,$ you will complete one month $($September$)$ and the quarterly reports for that first month of operations. This will be submitted as a mid$-$point check to ensure you are completing calculations and forms correctly before moving on to the remainder of the project.

$$ Then in Module $9,$ you will complete the final quarter $($October $$ December$)$ and the quarterly and annual reports.

The Company

On September $1,$ 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 $68105$

Tax Identification

Federal Tax ID $($EIN$)$: $47-3882497$

Nebraska State ID: $123456$

Employees and Employee Benefits

Payroll is paid monthly.

Including herself, Lolita has three paid employees. Lolita pays herself a salary. Her two other employees are hourly employees. The employee earnings records have the payment details including pay rates, withholding allowances, and identification information.

Employees have the option to contribute into a Payflex 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 $5\mathrm{.}4\%$ on the first $$9,000$ of earnings.

Federal Unemployment tax rate $0\mathrm{.}6\%$ on the first $$7,000$ of earnings.

Transactions and Requirements for Module $8$

$1.$ 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 $($Appendix C$).$ Use the percent 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.

September Salary & Wage Information

Employees Paid Hourly Regular Hours Overtime Hours

Linda A$.$ Osborne $1204$

Kathryn B$.$ Jones $1200$

Salaried Employee:

Lolita L$.$ Lovely $$6,000$ per Month

Prepare and post journal entries. For the transactions listed below, prepare appropriate journal entries and post the entries to the appropriate general ledger accounts.

September

Sep $30$ Journalize and post the entry to record the September payroll. Your entry should include: Salaries & Wages Expense, all of the related deductions, and a credit to Salaries & Wages Payable for the net pay.

Sep $30$ Journalize and post the entry to record the employer$$s payroll tax expense for the month of September. 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 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 September $30.$ You should assume that the September taxes will be deposited on October $10($in Module $9).$ Therefore, the 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 September $30.$ Also prepare the Nebraska wage report. $($Form UI$-11$T and UI$-11$W$)$

Electronic Files

File Name What you will find

File $1$: Project Narrative $$ Module $8$ Instructions This file is the starting point for the project. You are already here! As you have seen, this provides the detail of the project for the first month of operations.

File $2$: Payroll Accounting forms This 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 $941$ Federal Form $941$: Employer$$s quarterly federal tax return

File $4$: NE Unemployment Reports Nebraska unemployment tax form $($Combined Tax Report UI$-11$T and UI$-11$W$)$

File $5$: Project Narrative $$ Module $9$ Instructions This file provides the detail of the project for October $$ December operations.

File $6$: Form $940$ Federal Form $940$: Annual Unemployment Tax Return

File $7$: Form W$-2$s for each employee

File $8$: Form W$-3$; Transmittal of Wage and Tax Stateme $,$ nts

Lilita Lovely: #of Dependendants $2,$ payflex $$125\mathrm{.}00,$ Step $3$ amount $$4000\mathrm{.}00$

Linda Osborne: #of Dependants $0,$ payflex $$80\mathrm{.}00,$ hourly rate $-$ $$25\mathrm{.}00,$ Step $3$ amount $$0\mathrm{.}00$

Kathryn Jones: #of Dependants $1,$ payflex $$0\mathrm{.}00,$ hourly rate $$22\mathrm{.}00,$ Step $3$ Amount $$2000\mathrm{.}00$