Question
Majic Corporation sells phone cases to public and private companies. They are located at 123 Locus Rd, Toronto, ON M1H 4S3. They employ 200 full
Majic Corporation sells phone cases to public and private companies. They are located at 123 Locus Rd, Toronto, ON M1H 4S3. They employ 200 full time employees who work in sales, customer service and office support roles.
They have had an annual remuneration of over $1,000,000 for the past several years therefore their EHT rate is 1.95%.
Pay period #1 started December 27, 2020. All are paid on a bi-weekly basis. All benefits are processed each pay on an as enjoyed basis.
The first payday for employees is Jan 13, 2021.
They have three staff in the Customer Service Department answering questions from clients and the general public. They all work Monday to Friday and do not work statutory holidays but are paid for them.
A)
Marijke has been with Majic for 5 years and is the Customer Service Supervisor. She earns $2000.00 bi-weekly working 35 hours per week. She does not work any overtime. She received a $300.00 one-time bonus pay period 6
Her employer provides her with the following:
Health and Dental - fully paid for by the employer at a monthly cost of $469.00
Group Term life insurance - 2x her annual salary at a cost of $0.69 per month per $1000 of coverage paid for by the employer
AD&D - $50,000.00 at a cost of $0.19 per month per $1000 of coverage paid for by the employer
She has the following personal deductions from her pay:
$5.00 per pay donation to the United Way
Federal and Provincial income tax - she is claiming maximum tax (Claim Code 0) plus an additional $10.00 per pay
Period 6
- Gross pay:
- Gross taxable income:
- CPP contributions:
- EI premiums:
- Federal and provincial taxes
- Group term life insurance
- AD & D:
- United Way:
- Net pay:
- Employer health tax:
Period 7
- Gross pay:
- Gross taxable income:
- CPP contributions:
- EI premiums:
- Federal and provincial taxes
- Group term life insurance
- AD & D:
- United Way:
- Net pay:
- Employer health tax:
C)
Roger started with Majic this year. His first day was January 6, 2021. He was hired on a temporary basis to cover an employee who was off on maternity leave. He earns $16.50 per hour. He is covered under the Employment Standards Act of Ontario. He works 7 hours per day 5 days per week and receives 4% vacation pay on each pay cheque. He does not receive any benefits nor does he work overtime. He has taken one unpaid day off March 30th. He receives 7 hours of statutory holiday pay for any statutory holidays and does not work those days. He too is paid bi-weekly
He has the following deductions:
Federal and Provincial taxes - he is claiming basic tax (Claim code 1)
He has found a full-time job and his last day to work will be May 13, 2021
Period 6
- Gross pay:
- Gross taxable income:
- CPP contributions:
- EI premiums:
- Federal and provincial taxes
- Group term life insurance
- AD & D:
- United Way:
- Net pay:
- Employer health tax:
Period 7
- Gross pay:
- Gross taxable income:
- CPP contributions:
- EI premiums:
- Federal and provincial taxes
- Group term life insurance
- AD & D:
- United Way:
- Net pay:
- Employer health tax:
B)
Neema has been with Majic for 3 years and answers calls specifically from clients.
She earns $18.25 per hour and works 35 hours per week. She also does not work any overtime. She is paid bi-weekly. Her employer provides the following:
Health and Dental - at a total cost of $469.00 per month, 50% is paid by the employer and 50% is paid for by Neema
Group Term life - $50,000.00 at a cost of $0.45 per month per $1000 of coverage paid for by the employer
She does not receive AD&D
She has the following deductions:
Federal and Provincial taxes - she is claiming basic tax (Claim code 1) plus an additional $5.00 per pay
Calculate the following for Neema:
Period 6
- Gross pay:
- Gross taxable income:
- CPP contributions:
- EI premiums:
- Federal and provincial taxes
- Group term life insurance
- AD & D:
- United Way:
- Net pay:
- Employer health tax:
Period 7
- Gross pay:
- Gross taxable income:
- CPP contributions:
- EI premiums:
- Federal and provincial taxes
- Group term life insurance
- AD & D:
- United Way:
- Net pay:
- Employer health tax:
C)
Roger started with Majic this year. His first day was January 6, 2021. He was hired on a temporary basis to cover an employee who was off on maternity leave. He earns $16.50 per hour. He is covered under the Employment Standards Act of Ontario. He works 7 hours per day 5 days per week and receives 4% vacation pay on each pay cheque. He does not receive any benefits nor does he work overtime. He has taken one unpaid day off March 30th. He receives 7 hours of statutory holiday pay for any statutory holidays and does not work those days. He too is paid bi-weekly
He has the following deductions:
Federal and Provincial taxes - he is claiming basic tax (Claim code 1)
He has found a full-time job and his last day to work will be May 13, 2021
Period 6
- Gross pay:
- Gross taxable income:
- CPP contributions:
- EI premiums:
- Federal and provincial taxes
- Group term life insurance
- AD & D:
- United Way:
- Net pay:
- Employer health tax:
Period 7
- Gross pay:
- Gross taxable income:
- CPP contributions:
- EI premiums:
- Federal and provincial taxes
- Group term life insurance
- AD & D:
- United Way:
- Net pay:
- Employer health tax:
D)
Now that you have calculated the net pays for each of these employees, calculate the totals for all three employees for the following:
Period 6
Total Gross earnings for all 3 employees
Total Taxable Income for all 3 employees
Total employee portions for CPP
Total employer portions for CPP
Total employee portions for EI
Total employer portions for EI
Total Federal and Provincial taxes
Total employee portion of Health benefits
Total employer portion of Health benefits
Total for United Way
Total For Group Insurance
Total AD&D
Total EHT
Period 7
Total Gross earnings for all 3 employees
Total Taxable Income for all 3 employees
Total employee portions for CPP
Total employer portions for CPP
Total employee portions for EI
Total employer portions for EI
Total Federal and Provincial taxes
Total employee portion of Health benefits
Total employer portion of Health benefits
Total for United Way
Total For Group Insurance
Total AD&D
Total EHT
E) Journal Entry for Pay Periods 6 and 7. Please remember to record all requirements a journal entry must-have. Using the grid below complete the journal entry for these pay periods using the amounts you calculated in section D.
Debit Credit
Wage Expense
CPP Expense
CPP Payable
EI Expense
EI Payable
Fed & Prov tax payable
Health expense
Health payable
United Way payable
Group Insurances expense
Group Insurances payable
EHT expense
EHT payable
AD & D Expense
AD & D Payable
F)
As previously mentioned, Roger has decided to leave Majic. His last day worked will be May 13th. He will require a Record of Employment.
Complete the boxes below with the correct amounts/information that should be included in each of the sections.
Amount
Box 10
Box 11
Box 12
Box 14
Box 15 A
Box 15 B
Box 16
What will Service Canada use the information provided on the Record of Employment to determine?
G)
Year-End
In this question you will need to complete the boxes for a T4 for Martha a Majiic employee, using the following information. Enter your answers in the grid provided below the copy of the T4. This would be her 2020 T4.
1. Gross earnings = $63500.00
2. Her taxable benefit for Group term life insurance was $81.50
3. Her taxable benefit for AD&D was $16.25
4. Her employer paid Health and Dental was $440.00
5. Her total Federal and Provincial Taxes were $8825.33
6. Her union dues were $104.00
7. You will need to calculate her CPP and EI deductions.
Description Answer
Company
Year
Box 10 Province of Employment
Box 14 Employment Income
Box 16 Employee's CPP contributions
Box 18 Employee's EI premiums
Box 22 Income Tax deducted
Box 24 EI insurable earnings
Box 26 CPP/QPP pensionable earnings
Other Information-Code/Box #44
Other Information-Code/Box #40
Explain why you would not issue a T4A for Martha
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Financial Accounting A Concepts Based Introduction
Authors: David Kolitz
1st Edition
1138844977, 978-1138844971
