No. 3

Prepare the payroll for the last pay period of October from Time Clerk’s

LO 1

Report Nos. 40 and 41.

The proper procedure in recording the payroll follows:

• ➀ Complete the payroll register.

  Project Audit Test

  ✓Net Paid $12,376.89

  In as much as only a portion of the payroll register sheet was used in recording the October 9 payroll, the October 23 payroll should be recorded on the same sheet to save space. On the first blank ruled line after the October 9 payroll, insert “Payday October 23—For Period Ending October 17, 20--.” On the following lines, record the payroll information for the last pay date of October. When recording succeeding payrolls, continue to conserve space by recording two payrolls on each separate payroll register sheet.

  Pay Points

  Even though they are not on the time clerk’s report, remember to pay the president, sales manager, sales representatives, and supervisors.

  The workers in the plant (Bonno and Ryan) are paid time and a half for any hours worked over eight each workday and for work on Saturdays and are paid twice the regular hourly rate for work on Sundays or holidays.

  LO 2

  With this pay period, the cumulative earnings of several employees exceed the taxable income base set up by FUTA and SUTA. This factor must be considered in preparing the payroll register and in computing the employer’s payroll taxes. Refer to each employee’s earnings record to see the amount of cumulative earnings.

• LO 3

  ➁ Make the entry transferring from Cash to Payroll Cash the net amount of the total payroll, and post.

• ➂ Post the required information from the payroll register to each employee’s earnings record.

• ➃ Record in the journal the salaries, wages, taxes withheld, group insurance premiums collected, union dues withheld, and net amount paid, and post to the proper ledger accounts.

  Pay Points

  The employees’ Pennsylvania State Unemployment Tax (suta) is calculated (0.0006) on the total wages of each employee. There is no taxable wage limit on the employees’ portion of the tax.

  The entry required to record the October 23 payroll is the same as that to record the October 9 payroll, except it is necessary to record the liability for the amount withheld from the employees’ wages to pay their part of the group insurance premium. The amount withheld should be recorded as a credit to Group Insurance Premiums Collected.

• OCTOBER 23 PAYROLL: (As you complete your work, answer the following questions for the October 15 through October 23 payroll.)

  What is the gross pay for Anthony V. Bonno?

• What is the amount of OASDI withheld for Catherine L. Ford?

• What is the total net pay for all employees?

• What is the total amount of group insurance withheld for all employees?

• What is the amount of the credit to Employees FIT Payable?

• What is the amount of the debit to Payroll Taxes?

• What is the amount of the credit to SUTA Taxes Payable—Employer?

• What is the amount of the debit to Employees SIT Payable on October 20?

• What is the balance of FICA Taxes Payable—OASDI?

• What is the balance of Union Dues withheld for the employees?

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