October 9, 20- The first payroll in October covered the two workweeks that ended or September 26 and October 3. This payroll transaction has been entered for you in the payroll register, the employees' earnings records, the gen- eral journal, and the general ledger. By reviewing the calculations of the wages and deductions in the payroll register and the posting of the infor- mation to the employees' earnings records, you can see the procedure to No. 1 be followed each payday Wages and salaries are paid by issuing special payroll checks. When the bank on which they are drawn receives such checks, they will be charged against the pay- roll cash account. Observe the following rules in computing earnings each pay period 1. Do not make any deduction from an employee's earnings if the employee loses less than 15 minutes of time in any day. Time lost that exceeds 15 minutes is rounded to the nearest quarter-hour and deducted. If the time lost by an employee is not to be deducted, the time clerk will make a nota- tion to that effect on the Time Clerk's Report. FIGURE 7.5 Glo-Brite Labor Cost Accounts Personnel Accounts to Be Charged President (0'Neill) Executive Secretary (Ford) Programmer (Williams) Time Clerk (Russell) Accounting Trainee (Student) Administrative Salaries Office Salaries Sales Manager (Ferguson) Sales Representative (Mann) Sales Salaries Workers (Bonno and Ryan) Supervisor (Sokowski) Plant Wages Payroll Accounting 2017 2. In completing the time record columns of the payroll register for al workers, you should place an 8 in the day column for each full day worked (refer to page PR-2 at the end of the book). If an employee works less than a full day, show the actual hours for which the employee will be paid. In the case of an employee who begins work during a pay period, compute the earnings by paying the employees their weekly rate for any full weelk worked. For any partial week, compute the earnings for that week by multi- plying the hours worked by the hourly rate of pay If time lost is to be deducted from a salaried employee's pay, the employee's pay must be determined by multiplying the actual hours worked for that week by the hourly rate. If hours are missed but no pay is deducted, include those hours in the Time Record columns on the payroll register. The follow- ing schedule shows the weekly and hourly wage rates of the salaried employees: 3. 4. Employee Hourly Rate $28.13 15.25 16.88 28.85 15.00 25.63 15.29 Weekly Rate Ferguson, James C Ford, Catherine L Mann, Dewey W O'Neill, Joseph T. Russell, Virginia ._ Sokowski, Thomas L Williams, RuthV 51,125.00 610.00 675.00 1,153.85 600.00 1,025.00 611.54 Plant workers (Bonno and Ryan), other than supervisors, are employed on an hourly basis. Compute the wages by multiplying the number of hours worked during the pay period by the employee's hourly rate. The information needed and the sequence of steps that are completed for the payroll are presented in the following discussion. 5. 6. Time Clerk's Report No. 38 For the Week Ending September 26, 20 Time Time M T W T F S |Worked! Lost Time Record EmployeeS 40 hrs. 40 hrs. 40 Bonno, A. V hrs. 40 hrs. 36 hrs. 32 hrs. 8 hrs. Russell, V. A.... Ryan, N. A. Williams, R. V Time lost because of personal business charged to personal leaves no deduction for this time lost. 8 8 D 8 8 D lost full day Time Clerk's Report No. 39 For the Week Ending October 3, 20- Time Record Time Time Employee 40 hrs. 40 hrs. 40 hrs. 40 hrs. 36 hrs. 40 hrs. Bonno, A. V. Russell, V. A. Ryan, N. A. Student Williams, R. V... The time clerk prepared Time Clerk's Report Nos. 38 and 39 from the time cards used by the employees for these workweeks. Inasmuch as the president, sales manager, sales representatives, and supervisors do not ring in and out on the time clock, their records are not included in the time clerks report, but their sal aries must be included in the payroll. a) The following schedule shows the hourly wage rates of the three hourly employees used in preparing the payroll register for the payday on October 9. Employee Bonno, Anthony V Ryan, Norman A Hourly Rate 517 60 8.00 14.00 The entry required for each employee is recorded in the payroll register. The names of all employees are listed in alphabetical order, including yours as Student." The fold-out payroll register forms needed to complete this project are bound at the back of the book (pages PR-2, PR-3, and PR-4). No deduction has been made for the time lost by Williams. Thus, the total number of hours (80) for which payment was made is recorded in the Regular Earnings Hours column of the payroll register. However, a notation of the time lost (D) was made in the Time Record column. When posting to Williams's earnings record, 80 hours is recorded in the Regular Earnings Hours column (no deduction for the time lost). In computing the federal income taxes to be withheld, the wage-bracket tables in Tax Table B at the back of the book were used (pages T-5 to T-14), Each payday, $8 was deducted from the earnings of the two plant workers for union dues (Bonno and Ryan). Payroll check numbers were assigned beginning with check no. 672. In the Labor Cost Distribution columns at the extreme right of the payroll regis ter, each employee's gross earnings were recorded in the department in which the employee regularly works. The totals of the Labor Cost Distribution columns provide the amounts to be charged to the appropriate salary and wage expense accounts and aid department managers and supervisors in comparing the actual labor costs with the badgeted amounts. Once the net pay of each employce was computed, all the amount columns in the payroll register were footed, proved, and ruled An entry was made in the journal (page 725) transferring from the regular cash account to the payroll cash account the amount of the check issued to Pay- roll to cover the net amount of the payroll; next, the entry was posted. Information from the payroll register was posted to the employees' earnings records (see pages 7-43 to 7-47) Note that when posting the deductions for each employee, a column has been pro vided in the earnings record for recording each deduction for FICA (OASDL and HI). FIT, SIT, SUTA, and CI. All other deductions for each employee are to be totaled and recorded as one amount in the Other Deductions column. Subsidiary ledgers are maintained for Group Insurance Premiums Collected and Union Dues Withheld Thus, any question about the amounts withheld from an employee's earnings may be answered by referring to the appropriate subsidiary ledger. In this project, your work will not involve any recording in or reference to the subsidiary ledgers. The proper journal entry recorded salaries, wages, taxes, and the net amount of cash paid from the totals of the payroll register. The journal entry to record the payroll for the first pay in the fourth quarter appears below and in the general journal (page 7-25). Administrative Salaries Office Salaries Sales Salaries Plant Wages 2.307.69 4651.08 3,600.00 FICA Taxes Payable- OASD FICA Taxes Payable-HI Employees FIT Payable, Employees SIT Payable Employees SUTA Payable. Employees aT Payable. Union Dues Payable. Payroll Cash 95833 224.14 1,124.00 474.55 10.85 604.39 16.00 12.044 51 The amounts charged the salary and wage expense accounts were obtained from the totals of the Labor Cost Distribution columns in the payroll register. As shown in the listing of the labor cost accounts in Figure 7.5 on page 7-6 the sal- aries and wages were charged as follows: Administrative Salaries Joseph T. O'Neill (President) Office Salaries Catherine L. Ford (Executive Secretary) Ruth V Williams (Programmer) James C. Ferguson (Sales Manager) Virginia A. Russll (Time Clerk) Student (Accounting Trainee) Sales Salaries Dewey W Mann (Sales Representative Plant Wages Anthony V Bonno (Mixer Operator) Norman A. Ryan (Electrician) Thomas J. Sokowski (Supervisor) $958.aes Paable-OASDI and FICA Taxes Payable-HI were credited for 14, respectively, the amounts deducted from employees' wages. FIT Payable, Employees SIT Payable, Employees SUTA Payable, oyees CIT Payable, and Union Dues Pavable were credited for the total amount withheld for each kind of dedaction from employees' wages. In subsequent transactions, Group Insurance Premiums Collected will be credited for the amounts withheld from employees' wages for this type of deduction. Finally, Pay Em Em roll Cash was credited for the sum of the net amounts paid all employees. prol for his pay were then recorded in the general journal (page 7-25) as follows: Payroll Taxes 1,381.11 FICA Tanes Payable OASD FICA Taxes Payable-Hi FUTA Taxes Payable 958.32 224.12 22.91 175.76 Payroll Taxes was debited for the sum of the employer's FICA, FUTA, and SUTA taxes. The taxable earnings used in computing each of these payroll taxes were obtained from the appropriate column totals of the payroll register. Note that only part of Ford's wages are taxable ($700 out of $1,220 gross pay) for FUTA (S7,000 limit). The computation of the debit to Payroll Taxes was: FICA ASDI FICA-H: FUTA: SUTA Total Payroll 62% of S15.45677- $ 958.32 1.45% of S 154567-22412 22.91 S785% of se77800 t, 175.76 1,381.11 0.5% of SS1800 = FICA Taxes Payable-OASDI was credited for $958.32, the amount of the liabil- ity for the employer's portion of the tax. FICA Taxes Payable-HI was credited for $224.12, the amount of the liability for the employer's share of this tax. FUTA Taxes Payable was credited for the amount of the tax on the employer for federal unemployment purposes ($22.91). SUTA Taxes Payable-Employer was credited for $175.76, which is the amount of the contribution required of the employer under the state unemployment compensation law @ The journal entries were posted to the proper ledger accounts (pages 7-34 to 7-41). October 15 This is the day on which the deposits of FICA and FIT taxes and the city of Phila- delphia income taxes for the September payrolls are due. However, in order to concentrate on the fourth-quarter payrolls, we will assume that the deposits for the third quarter and the appropriate entries were already completed. October 20 No. 2 On this date, Glo-Brite Paint Company must deposit the Pennsylvania state income taxes withheld from the October 9 payroll. The deposit rule states that if the employer expects the aggregate amount withheld each quarter to be S1,000 withheld tax semimonthly The tax must be remitted within three banking days after the close of the semimonthly periods ending on the 15th and the last day of the month. D Prepare the journal entry to record the deposit of the taxes, and post to the appropriate ledger accounts. or more, the employer must pay the Pennsylvania has eliminated the filing of paper forms (replaced by telefile or online filing). The information needed to telefile is listed on page 7-51-complete the information worksheet needed for the first semimo account number is 000-0-3300, its EIN is 00-0000660, its filing pass- word is GBPCOM, and its telephone number is (215) 555.9559. October 23 No. 3 Prepare the payroll for the last pay period of October from Time Clerks Report Nos. 40 and 41. The proper procedure in recording the payroll follows O Complete the payroll register In as much as only a portion of the payroll register sheet was used in re- cording the October 9 payroll, the October 23 payroll should be recorded on the same sheet to save space. On the first blank ruled line at- ter the October 9 payroll, insert "Payday October 23-For Period End- ing 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. The workers in the plant (Bonmo and Ryan) are paid time and a balf for any hours worked over eight each workday and for work on Saturdays and are paid turice the regular hourly rate for work on Sundays or holidays. 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 con- sidered in preparing the payroll register and in computing the employer's pay roll taxes. Refer to each employee's earnings record to see the amount of cumulative earnings Time Clerk's Report No 40 For the Week Ending October 10, 20- Time Record Time Time Employee SM T WTF S Worked Lost 8 8 8 884 44 hrs Bonno, A. V Ford, C. L Russell. V A.... Ryan, N. A . Student Williams, R. V Time lost on account of death of selative, charged agains nal penonal leave no deduction for time lost 36 hrs. 4 hrs. 40 hrs 40 hrs. 36 hrs. 40 hrs. Time Clerk's Report No. 41 For the Week Ending October 17, 20- Time Record Time Time Employee SMTWTFSWorked Lost Bonno, A. V Ford, C. L Russell, V. A. Ryan, N. A. Student Williams, R.V 40 hrs. 40 hrs. 40 hrs... 8 8 8 8 8 8 48 hrs 36 hrs. 40 hrs. Time Clerk's Report No. 43 For the Week Ending October 31, 20- Time Record Time Time S M T WTFS WorkedLost Employee Bonno, A. V Ford, C. L.... Russell, V. A Ryan, N. A. Student Williams, R. V.- 40 hrs. 40 hrs. 40 hrs. 40 hrs. 36 hrs. 40 hrs. Prepare the payroll for the first pay period in November from Time Clerk's Report Nos. 42 and 43 and record the paychecks issued to all employees. Record this payroll at the top of the second payroll register sheet Note: Virginia Russell worked only 38 hours in the week ending October 24. Therefore, compute her pay for that week by multiplying 38 by $15.00 (her hourly rate). Ruth Williams worked only 39 hours in the week ending October 24. Therefore, compute her pay for that week by multiplying 39 by $15.29 (her hourly rate). Also, record the employer's payroll taxes. o. 9 November 13 No. 10 Because of her excessive tardiness and absenteeism during the year, the company discharged Ruth Williams today. For the week ending Novem- ber 7, she was late a total of six hours; and for this week, she missed two full days and was late two hours on another day. In lieu of two weeks notice, Williams was given two full weeks' pay ($1,223.08). Along with her dismissal pay ($1,223.08), she was paid for the week ending Novem- ber 7 (34 hours, or $$19.86) and the days worked this current week (22 hours, or $336.38). The total pay for the two partial weeks is $856.24 D Record a separate payroll register (on one line) to show Williams's total earnings, deductions, and net pay. The two weeks' dismissal pay is subject to all payroll taxes. Include dismissal pay with the total earnings but do not show the hours in the Time Record columns. Use the tax table for the biweekly payroll period for the total gross pay ($2,079.32) of Williams. The deduction for group insurance premiums is $14.40. In the Time Record column, make a note of Williams's discharge as of this date. Indicate the payroll check number used to prepare the final check for Willams. When posting to the earnings record, make a notation of discharge on this date 0 Prepare the journal entries to transfer the net cash and to record Wil- liams's final pay and the employer's payroll taxes. Post to the ledger accounts. Use the blank Form W-2 on page 7-60. Box "a should be left blank, since the Glo-Brite Paint Company does not use a control number to identify individual Forms W-2 November 16 No. Worksheet (page 7-50). Since the company is subject to the monthly deposit rule, the deposit is due on the 15th of the following month. See the deposit requirements explained on pages 3-16 to 3-19. November 15 is a Sunday; therefore, the deposit is to be made on the next business day Prepare the journal entry to record the deposit of the taxes, and post to 11 Electronically deposit the amount of FICA taxes and federal income taxes for the October payrolls and complete the Federal Deposit Information the appropriate ledger accounts income tax, you must deposit the taxes with the Department of Revenue. The deposit rule that affects Glo-Brite Paint Company states that if the 2 Since Glo-Brite Paint Company withholds the city of Philadelphia must deposit the tax monthly by the 15th of the following month. The withheld taxes for the October payrolls were $1,221.34. withhel d taxes are between $350 and $16,000 per month, the com Prepare the journal entry to record the deposit of the taxes, and post to the appropriate ledger accounts. D Complete the Philadelphia Employer's Return of Tax Withheld cou- pon (Monthly Wage Tax), which appears on page 7-52. November 17 No. 13 Prepare an employee's earnings record for Beth Anne Woods, a new em- ployee who began work today, Tuesday. Woods is single and claims one withholding allowance. She is employed as a programmer at a monthly salary of $2,600. Address, 8102 Franklin Court, Philadelphia, PA 19105- 0915. Telephone, 555-1128. Social Security No. 000-00-1587. She is eligi- ble for group insurance coverage of $47,000 immediately, although her first deduction for group insurance will not be made until December 18. Department: Office tDepartment: $600.00 Weekly rate: $600.00 Hourly rate: $15.00 November 18 No. 14 Deposit with the state of Pennsylvania the amount of state income taxes withheld from the November 6 and 13 (Ruth Williams) payrolls and complete the information worksheet. November 20 No. 15 With this pay, the company has decided to offer employees a Savings In- centive Match Plan (SIMPLE Retirement Plan). Most of the employees opted to wait until the start of the following year to participate. How ever, the following employees have decided to take part in the plan for the remaining pay periods of the year. lames Ferguson Dewey Mann $500 contribution per pay period 250 contribution per pay peried 5700 contribution per pay peried 200 contribution per pay period Norman Ryan The contributions are to be deducted from the participating employees pay and are excluded from the employee's income for federal income tax purposes. The other payroll taxes still apply. On the payroll registers the earnings record, use the blank column under Deductions" for these contributions. Use the term "SIMPLE" as the new heading for this deduc tion column (on both the payroll register and employee's earnings re Use the account in the general ledger for SIMPLE Contributions Pay- able-account no. 29 The company must match these contributions dollar for dollar, up to 3 percent of the employee's compensation. These payments will be proc essed through the Accounts Payable Department. Prepare the payroll for the last pay period of November from T Clerk's Report employees. Also, record the employer's payroll taxes. Nos. 44 and 45, and record the paychecks issued all Time Clerk's Report No. 44 For the Week Ending November 7, 20 Time Record Time Time Employee S M T WTFS Worked Lost Bonno, A. V Ford, C. L Russell, V. A. Ryan, N. A. Student Williams, R. V 40 hrs. 40 hrs. 38 hrs. 2hrs 40 hrs. 36 hrs. 34 hrs. 6hrs.." Time lost for personal business; deduct 2 hours' pay "Time lost because of tardiness; deduct 6 hours' pay Time Clerk's Report No. 45 For the Week Ending November 14, 20 Time Time EmployeeTime Record s M TWTF S Worked Lost 24 hrs.. Bonno, A. V Ford, C. L Russell, V. A. Ryan, N. A. Student Williams, R. V 40 hrs. 40 hrs. 40 hrs. 36 hrs. D D 8 6 8 22 hrs. 18 hrs." Time lost because of tardiness: deduct 2 hours' pay. Unexcused absences, deduct 16 hours pay No. 16 Salary increases of $30 per week, effective for the two weeks covered in the December 4 payroll, are given to Catherine L. Ford and Virginia A. Russell. The group insurance coverage for Ford will be increased to S50,000; for Russell, it will be increased to $49,000. Update the employ- es' earnings records accordingly. The new wage rates are listed below Employee Frd, Catherine L. Russell, Virginia Weely Rate $640.00 630.00 Hourly Rate $16.00 15.75 No. 20 Anthony V. Bonno reports the birth of a son and completes an amended Form W-4, showing his total withholding allowances to be five. Change his earnings record accordingly, effective with the December 18 pay. No. 21 Both Anthony Bonno and Norman Ryan have been notified that their union dues will increase to $9 per pay, starting with the last pay period of the year. Reflect these increases in the December 18 pay and show the changes on their earnings records December 9 No. 22 Pay the treasurer of the union the amount of union dues withheld during the month of November. December 11 No. 23 The Payroll Department was informed that Virginia A. Russell died in an automobile accident on her way home from work Thursday, December 10. December 14 No. 24 D Make a separate entry (on one line) in the payroll register to record the issuance of a check payable to the Estate of Virginia A. Russell. This check covers Russell's work for the weeks ending December 5 and 12 ($1,134.00) plus her accrued vacation pay ($1,260.00). Do not show the vacation hours in the Time Record columns on the payroll register, but include them in the Total Earnings column. Russell's final biweekly pay for time worked and the vacation pay are sub- ject to FICA, FUTA, and SUTA (employer and employee) taxes. Since Russell's cumulative earnings have surpassed the taxable earnings figures established by FUTA and SUTA, there will not be any unemployment tax on the employer. The deduction for group insurance premiums is S14.70. o Make a notation of Russell's death in the payroll register and on her earnings record. o Prepare journal entries to transfer the net pay and to record Russell's final pay and the employer's payroll taxes. Post to the ledger accounts. Include the final gross pay ($2,394.00) in Boxes 3 and 5, but not in oxes 1, 16, and 18. Use the blank Form W-2 on page 7-60. In addition, the last wage payment and vacation pay must be reported on Form 1099-MISC. A Form 1096 must also be completed. These forms will be completed in February before their due date. (See Transac- tion Nos. 41 and 42 on page 7-67.) December 15 No. 25 Electronically deposit the amount of FICA taxes and federal income taxes for the November payrolls and complete the Federal Deposit Information Worksheet. No. 26 Deposit with the city of Philadelphia the amount of city income taxes withheld from the November payrolls. December 18 No. 27 Deposit with the state of Pennsylvania the amount of state income taxes withheld from the December 4 payroll and complete the information worksheet. No. 28 Glo-Brite has been notified by the insurance company that there will be no premium charge for the month of December on the policy for Virginia Russell. Prepare the entry for the check made payable to the estate of Virginia A. Russell, for the amount that was withheld for insurance from her December 14 pay. No. 29 Prepare an employee's earnings record for Richard Lloyd Zimmerman, who was employed today as time clerk to take the place left vacant by the death of Virginia A. Russell last week. His beginning salary is $2.600 per month. Address, 900 South Clark Street, Philadelphia, PA 19195 6247. Telephone, 555-2104. Social Security No. 000-00-1502. Zimmer man is married and claims one withholding allowance. Zimmerman is eligible for group insurance coverage of $47,000, although no deduction for group insurance premiums will be made until the last payday in January Department: Office Weekly rate: $600.00 Hourly rate: $15.00 No. 30 Prepare the payroll for the latter pay of December from Time Clerk's Report Nos. 48 and 49 and record the paychecks issued all employees Also, record the employer's payroll taxes. Effective with this pay, O'Neill completed a new Form W-4, changing his total withholding allowances to four. Previously, he had claimed fewer allowances than he had been using on his tax return. Change his earnings record accordingly In this pay, the president of the company, Joseph O'Neill, is paid his an- nual bonus. This does not affect O'Neill's insurance coverage, which is based on regular pay. This year, his bonus is $75,000. For withholding purposes, the bonus is considered a supplemental payment and is added to his gross pay, and the aggregate amount is taxed. For this pay, O'Neill has increased his SIMPLE deduction to $4,000. To determine the federal income tax, use the Table of Allowance Values along with Tax Table A (pages T-2 to T-4). In calculating the tax, do not round the aggregate to the nearest earnings dollar. In this pay, O'Neill has reached the OASDI ceiling. To calculate O'Neill's OASDI tax, multiply the OASDI ceiling of $118,500 by 6.2 percent and then subtract the year-to- date OASDI taxes withheld up to this pay. Note: After posting the information for this last pay to the employees' earnings records, calculate and enter the quarterly and yearly totals on each eanings record. Time Clerk's Report No. 48 For the Week Ending December 5, 20 EmplovesTime Record Time Time Bonno, A. V. Ford, C. L Russell, V. A. Ryan, N. A. Student Woods, B. A. 44 hrs 40 hrs 40 hrs 44 hrs 35 hrs. 1 40 hrs 40 hrs 4 888 8 8 ng Time lost because of tardiness; deduct I hours pay WASHINGTON UPDATE EMPLOYERS IN "CREDIT REDUCTION" STATES MUST CALCULATE A CREDIT REDUCTION AS AN ADJUSTMENT TO THEIR FUTA TAX ON THEIR FORM 940 EMPLOYER'S ANNUAL FEDERAL UNEMPLOYMENT (FUTA) TAX RETURN. CREDIT REDUCTION STATES ARE STATES THAT DID NOT REPAY THE MONEY THEY BORROWED FROM THE FEDERAL GOVERNMENT TO PAY UNEMPLOYMENT BENEFITS. EPLOYERS IN THESE STATES MUST USE SCHEDULE A (FORM 940) TO COMPUTE THE CREDIT REDUCTION, IN 2016 PENNSYLVANIA WAS NOT A CREDIT REDUCTION STATE D Complete Form 940, Employer's Federal Unemployment (FUTA) Tax Return, using the blank forms reproduced on pages 7-57 and 7-58. Also, complete the Federal Deposit Information Worksheet, using the blank form reproduced on page 7-50. No. 36 a. Total wages for the first three quarters was $142,224.57. FUTA tax- able wages for the first three quarters was $65,490.00. b. FUTA tax liability by quarter: 1st quarter-$204.53 2nd quarter-$105.25 3rd quarter-$83.16 The first FUT A deposit is now due., c. Journalize the entry to record the electronic deposit for the FUTA tax liability No. 37 O Prepare Form UC-2, Employer's Report for Unemployment Compensa- tion-Fourth Quarter, using the blank form reproduced on page 7-59. In Pennsylvania, a credit week is any calendar week during the quarter in which the employee earned at least $50 (without regard to when paid). The maxi- mum number of credit weeks in a quarter is 13. The telephone number of the company is (215) 555-9559. All other information needed in the form can be obtained from the ledger accounts, the payroll registers, and the employees' carnings records o Journalize the entry to record the payment of the taxes for the fourth quarter. preparing No. 38 Complete Form W-2, Wage and Tax Statement, for each current em- ployee, using the blank statements reproduced on pages 7-61 to 7-65 Use each employee's earnings record to obtain the information needed to complete the forms. The two plant workers (Bonno and Ryan) have had $121.00 in union dues withheld during the year. No. 39 Complete Form W-3, Transmittal of Wage and Tax Statements, using the blank form reproduced on page 7-66. Use the information on a Forms W-2 to complete this form. No. 40 Complete Pennsylvania Form REV-1667, W-2 Transmittal, using the blank form reproduced on page 7-66. Use the information on Forms W-2 to complete this report. The wages paid and the Pennsylvania tax withheld for the first three quarters are: 1st 2nd 3rd 534,088.75 45,535.62 %2600.20 1,046.52 $1,397.94 $1,921.83 QUESTIONS ON THE PAYROLL PROJECT 1. The total payroll tax expense incurred by the employer on salaries and wages 2. The total payroll tax expense incurred by the employer on the total earnings 3. The amount of the group insurance premiums collected from employees d 4. O'Neill has decided to give all current employees (excluding himsef) a bonus paid during the quarter ended December 31 wa of Joseph T. O'Neill during the fourth quarter was ing the quarter ended December 31 was payment during January equal to 5% of their total gross pay for last year. Determine the total of this bonus payment... On the financial statements prepared at the end of its first year of operations, he company must show an accurate picture of all expenses and all liabilities incurred. The last payday of the year was December 18. However, the pay ment to the employees on that day did not include the weeks ending Decem- ber 19 and 26 and the four days (December 28-31) in the following week. These earnings will be reflected in the January payrolls. Two-column journal paper is provided for use in journalizing the following entry on page 7-23 S. Prepare the adjusting entry as of December 31 to record the salaries and wages that have accrued but remain unpaid as of the end of the year. When calculating the amount of the accrual for each hourly worker, assume each employee worked eight hours on each day during the period with no over time (student works a 36-hour week-student worked 32 hours for the pe- riod December 28 through December 31). For each salaried worker, the accrual will amount to 14/10 of the worker's biweekly earnings, except for Zimmerman who worked only 10 days. Each of the labor cost accounts should be debited for the appropriate amount of the accrual, and Salaries and Wages Payable should be credited for the total amount of the accrual. There is no liability for payroll taxes on the accrued salaries and wages until the workers are actually paid. Therefore, the company follows the practice of not accruing payroll taxes. 6. Also, prepare the adjusting entry as of December 31 to record the accrued vacation pay as of the end of the year. Record the expense in a vacation ben efits expense account, and credit the appropriate liability account. Use the journal paper provided As of December 31, the vacation time earned but not used by each em- ployee is listed here. 80 hours three weeks two weeks Ferguson Ford Mann.one week O'Neill Ryan Sokowski.. two weeks four weeks 80 hours 72 hours Wood.none Young Zimmerman none none HAPTER 7 Payroll Project JOURNAL Page POST. REF DESCRIPTION DEBIT DATE CREDIT JOURNAL CREDIT POST. DEBIT REF 7-32 October 9, 20- The first payroll in October covered the two workweeks that ended or September 26 and October 3. This payroll transaction has been entered for you in the payroll register, the employees' earnings records, the gen- eral journal, and the general ledger. By reviewing the calculations of the wages and deductions in the payroll register and the posting of the infor- mation to the employees' earnings records, you can see the procedure to No. 1 be followed each payday Wages and salaries are paid by issuing special payroll checks. When the bank on which they are drawn receives such checks, they will be charged against the pay- roll cash account. Observe the following rules in computing earnings each pay period 1. Do not make any deduction from an employee's earnings if the employee loses less than 15 minutes of time in any day. Time lost that exceeds 15 minutes is rounded to the nearest quarter-hour and deducted. If the time lost by an employee is not to be deducted, the time clerk will make a nota- tion to that effect on the Time Clerk's Report. FIGURE 7.5 Glo-Brite Labor Cost Accounts Personnel Accounts to Be Charged President (0'Neill) Executive Secretary (Ford) Programmer (Williams) Time Clerk (Russell) Accounting Trainee (Student) Administrative Salaries Office Salaries Sales Manager (Ferguson) Sales Representative (Mann) Sales Salaries Workers (Bonno and Ryan) Supervisor (Sokowski) Plant Wages Payroll Accounting 2017 2. In completing the time record columns of the payroll register for al workers, you should place an 8 in the day column for each full day worked (refer to page PR-2 at the end of the book). If an employee works less than a full day, show the actual hours for which the employee will be paid. In the case of an employee who begins work during a pay period, compute the earnings by paying the employees their weekly rate for any full weelk worked. For any partial week, compute the earnings for that week by multi- plying the hours worked by the hourly rate of pay If time lost is to be deducted from a salaried employee's pay, the employee's pay must be determined by multiplying the actual hours worked for that week by the hourly rate. If hours are missed but no pay is deducted, include those hours in the Time Record columns on the payroll register. The follow- ing schedule shows the weekly and hourly wage rates of the salaried employees: 3. 4. Employee Hourly Rate $28.13 15.25 16.88 28.85 15.00 25.63 15.29 Weekly Rate Ferguson, James C Ford, Catherine L Mann, Dewey W O'Neill, Joseph T. Russell, Virginia ._ Sokowski, Thomas L Williams, RuthV 51,125.00 610.00 675.00 1,153.85 600.00 1,025.00 611.54 Plant workers (Bonno and Ryan), other than supervisors, are employed on an hourly basis. Compute the wages by multiplying the number of hours worked during the pay period by the employee's hourly rate. The information needed and the sequence of steps that are completed for the payroll are presented in the following discussion. 5. 6. Time Clerk's Report No. 38 For the Week Ending September 26, 20 Time Time M T W T F S |Worked! Lost Time Record EmployeeS 40 hrs. 40 hrs. 40 Bonno, A. V hrs. 40 hrs. 36 hrs. 32 hrs. 8 hrs. Russell, V. A.... Ryan, N. A. Williams, R. V Time lost because of personal business charged to personal leaves no deduction for this time lost. 8 8 D 8 8 D lost full day Time Clerk's Report No. 39 For the Week Ending October 3, 20- Time Record Time Time Employee 40 hrs. 40 hrs. 40 hrs. 40 hrs. 36 hrs. 40 hrs. Bonno, A. V. Russell, V. A. Ryan, N. A. Student Williams, R. V... The time clerk prepared Time Clerk's Report Nos. 38 and 39 from the time cards used by the employees for these workweeks. Inasmuch as the president, sales manager, sales representatives, and supervisors do not ring in and out on the time clock, their records are not included in the time clerks report, but their sal aries must be included in the payroll. a) The following schedule shows the hourly wage rates of the three hourly employees used in preparing the payroll register for the payday on October 9. Employee Bonno, Anthony V Ryan, Norman A Hourly Rate 517 60 8.00 14.00 The entry required for each employee is recorded in the payroll register. The names of all employees are listed in alphabetical order, including yours as Student." The fold-out payroll register forms needed to complete this project are bound at the back of the book (pages PR-2, PR-3, and PR-4). No deduction has been made for the time lost by Williams. Thus, the total number of hours (80) for which payment was made is recorded in the Regular Earnings Hours column of the payroll register. However, a notation of the time lost (D) was made in the Time Record column. When posting to Williams's earnings record, 80 hours is recorded in the Regular Earnings Hours column (no deduction for the time lost). In computing the federal income taxes to be withheld, the wage-bracket tables in Tax Table B at the back of the book were used (pages T-5 to T-14), Each payday, $8 was deducted from the earnings of the two plant workers for union dues (Bonno and Ryan). Payroll check numbers were assigned beginning with check no. 672. In the Labor Cost Distribution columns at the extreme right of the payroll regis ter, each employee's gross earnings were recorded in the department in which the employee regularly works. The totals of the Labor Cost Distribution columns provide the amounts to be charged to the appropriate salary and wage expense accounts and aid department managers and supervisors in comparing the actual labor costs with the badgeted amounts. Once the net pay of each employce was computed, all the amount columns in the payroll register were footed, proved, and ruled An entry was made in the journal (page 725) transferring from the regular cash account to the payroll cash account the amount of the check issued to Pay- roll to cover the net amount of the payroll; next, the entry was posted. Information from the payroll register was posted to the employees' earnings records (see pages 7-43 to 7-47) Note that when posting the deductions for each employee, a column has been pro vided in the earnings record for recording each deduction for FICA (OASDL and HI). FIT, SIT, SUTA, and CI. All other deductions for each employee are to be totaled and recorded as one amount in the Other Deductions column. Subsidiary ledgers are maintained for Group Insurance Premiums Collected and Union Dues Withheld Thus, any question about the amounts withheld from an employee's earnings may be answered by referring to the appropriate subsidiary ledger. In this project, your work will not involve any recording in or reference to the subsidiary ledgers. The proper journal entry recorded salaries, wages, taxes, and the net amount of cash paid from the totals of the payroll register. The journal entry to record the payroll for the first pay in the fourth quarter appears below and in the general journal (page 7-25). Administrative Salaries Office Salaries Sales Salaries Plant Wages 2.307.69 4651.08 3,600.00 FICA Taxes Payable- OASD FICA Taxes Payable-HI Employees FIT Payable, Employees SIT Payable Employees SUTA Payable. Employees aT Payable. Union Dues Payable. Payroll Cash 95833 224.14 1,124.00 474.55 10.85 604.39 16.00 12.044 51 The amounts charged the salary and wage expense accounts were obtained from the totals of the Labor Cost Distribution columns in the payroll register. As shown in the listing of the labor cost accounts in Figure 7.5 on page 7-6 the sal- aries and wages were charged as follows: Administrative Salaries Joseph T. O'Neill (President) Office Salaries Catherine L. Ford (Executive Secretary) Ruth V Williams (Programmer) James C. Ferguson (Sales Manager) Virginia A. Russll (Time Clerk) Student (Accounting Trainee) Sales Salaries Dewey W Mann (Sales Representative Plant Wages Anthony V Bonno (Mixer Operator) Norman A. Ryan (Electrician) Thomas J. Sokowski (Supervisor) $958.aes Paable-OASDI and FICA Taxes Payable-HI were credited for 14, respectively, the amounts deducted from employees' wages. FIT Payable, Employees SIT Payable, Employees SUTA Payable, oyees CIT Payable, and Union Dues Pavable were credited for the total amount withheld for each kind of dedaction from employees' wages. In subsequent transactions, Group Insurance Premiums Collected will be credited for the amounts withheld from employees' wages for this type of deduction. Finally, Pay Em Em roll Cash was credited for the sum of the net amounts paid all employees. prol for his pay were then recorded in the general journal (page 7-25) as follows: Payroll Taxes 1,381.11 FICA Tanes Payable OASD FICA Taxes Payable-Hi FUTA Taxes Payable 958.32 224.12 22.91 175.76 Payroll Taxes was debited for the sum of the employer's FICA, FUTA, and SUTA taxes. The taxable earnings used in computing each of these payroll taxes were obtained from the appropriate column totals of the payroll register. Note that only part of Ford's wages are taxable ($700 out of $1,220 gross pay) for FUTA (S7,000 limit). The computation of the debit to Payroll Taxes was: FICA ASDI FICA-H: FUTA: SUTA Total Payroll 62% of S15.45677- $ 958.32 1.45% of S 154567-22412 22.91 S785% of se77800 t, 175.76 1,381.11 0.5% of SS1800 = FICA Taxes Payable-OASDI was credited for $958.32, the amount of the liabil- ity for the employer's portion of the tax. FICA Taxes Payable-HI was credited for $224.12, the amount of the liability for the employer's share of this tax. FUTA Taxes Payable was credited for the amount of the tax on the employer for federal unemployment purposes ($22.91). SUTA Taxes Payable-Employer was credited for $175.76, which is the amount of the contribution required of the employer under the state unemployment compensation law @ The journal entries were posted to the proper ledger accounts (pages 7-34 to 7-41). October 15 This is the day on which the deposits of FICA and FIT taxes and the city of Phila- delphia income taxes for the September payrolls are due. However, in order to concentrate on the fourth-quarter payrolls, we will assume that the deposits for the third quarter and the appropriate entries were already completed. October 20 No. 2 On this date, Glo-Brite Paint Company must deposit the Pennsylvania state income taxes withheld from the October 9 payroll. The deposit rule states that if the employer expects the aggregate amount withheld each quarter to be S1,000 withheld tax semimonthly The tax must be remitted within three banking days after the close of the semimonthly periods ending on the 15th and the last day of the month. D Prepare the journal entry to record the deposit of the taxes, and post to the appropriate ledger accounts. or more, the employer must pay the Pennsylvania has eliminated the filing of paper forms (replaced by telefile or online filing). The information needed to telefile is listed on page 7-51-complete the information worksheet needed for the first semimo account number is 000-0-3300, its EIN is 00-0000660, its filing pass- word is GBPCOM, and its telephone number is (215) 555.9559. October 23 No. 3 Prepare the payroll for the last pay period of October from Time Clerks Report Nos. 40 and 41. The proper procedure in recording the payroll follows O Complete the payroll register In as much as only a portion of the payroll register sheet was used in re- cording the October 9 payroll, the October 23 payroll should be recorded on the same sheet to save space. On the first blank ruled line at- ter the October 9 payroll, insert "Payday October 23-For Period End- ing 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. The workers in the plant (Bonmo and Ryan) are paid time and a balf for any hours worked over eight each workday and for work on Saturdays and are paid turice the regular hourly rate for work on Sundays or holidays. 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 con- sidered in preparing the payroll register and in computing the employer's pay roll taxes. Refer to each employee's earnings record to see the amount of cumulative earnings Time Clerk's Report No 40 For the Week Ending October 10, 20- Time Record Time Time Employee SM T WTF S Worked Lost 8 8 8 884 44 hrs Bonno, A. V Ford, C. L Russell. V A.... Ryan, N. A . Student Williams, R. V Time lost on account of death of selative, charged agains nal penonal leave no deduction for time lost 36 hrs. 4 hrs. 40 hrs 40 hrs. 36 hrs. 40 hrs. Time Clerk's Report No. 41 For the Week Ending October 17, 20- Time Record Time Time Employee SMTWTFSWorked Lost Bonno, A. V Ford, C. L Russell, V. A. Ryan, N. A. Student Williams, R.V 40 hrs. 40 hrs. 40 hrs... 8 8 8 8 8 8 48 hrs 36 hrs. 40 hrs. Time Clerk's Report No. 43 For the Week Ending October 31, 20- Time Record Time Time S M T WTFS WorkedLost Employee Bonno, A. V Ford, C. L.... Russell, V. A Ryan, N. A. Student Williams, R. V.- 40 hrs. 40 hrs. 40 hrs. 40 hrs. 36 hrs. 40 hrs. Prepare the payroll for the first pay period in November from Time Clerk's Report Nos. 42 and 43 and record the paychecks issued to all employees. Record this payroll at the top of the second payroll register sheet Note: Virginia Russell worked only 38 hours in the week ending October 24. Therefore, compute her pay for that week by multiplying 38 by $15.00 (her hourly rate). Ruth Williams worked only 39 hours in the week ending October 24. Therefore, compute her pay for that week by multiplying 39 by $15.29 (her hourly rate). Also, record the employer's payroll taxes. o. 9 November 13 No. 10 Because of her excessive tardiness and absenteeism during the year, the company discharged Ruth Williams today. For the week ending Novem- ber 7, she was late a total of six hours; and for this week, she missed two full days and was late two hours on another day. In lieu of two weeks notice, Williams was given two full weeks' pay ($1,223.08). Along with her dismissal pay ($1,223.08), she was paid for the week ending Novem- ber 7 (34 hours, or $$19.86) and the days worked this current week (22 hours, or $336.38). The total pay for the two partial weeks is $856.24 D Record a separate payroll register (on one line) to show Williams's total earnings, deductions, and net pay. The two weeks' dismissal pay is subject to all payroll taxes. Include dismissal pay with the total earnings but do not show the hours in the Time Record columns. Use the tax table for the biweekly payroll period for the total gross pay ($2,079.32) of Williams. The deduction for group insurance premiums is $14.40. In the Time Record column, make a note of Williams's discharge as of this date. Indicate the payroll check number used to prepare the final check for Willams. When posting to the earnings record, make a notation of discharge on this date 0 Prepare the journal entries to transfer the net cash and to record Wil- liams's final pay and the employer's payroll taxes. Post to the ledger accounts. Use the blank Form W-2 on page 7-60. Box "a should be left blank, since the Glo-Brite Paint Company does not use a control number to identify individual Forms W-2 November 16 No. Worksheet (page 7-50). Since the company is subject to the monthly deposit rule, the deposit is due on the 15th of the following month. See the deposit requirements explained on pages 3-16 to 3-19. November 15 is a Sunday; therefore, the deposit is to be made on the next business day Prepare the journal entry to record the deposit of the taxes, and post to 11 Electronically deposit the amount of FICA taxes and federal income taxes for the October payrolls and complete the Federal Deposit Information the appropriate ledger accounts income tax, you must deposit the taxes with the Department of Revenue. The deposit rule that affects Glo-Brite Paint Company states that if the 2 Since Glo-Brite Paint Company withholds the city of Philadelphia must deposit the tax monthly by the 15th of the following month. The withheld taxes for the October payrolls were $1,221.34. withhel d taxes are between $350 and $16,000 per month, the com Prepare the journal entry to record the deposit of the taxes, and post to the appropriate ledger accounts. D Complete the Philadelphia Employer's Return of Tax Withheld cou- pon (Monthly Wage Tax), which appears on page 7-52. November 17 No. 13 Prepare an employee's earnings record for Beth Anne Woods, a new em- ployee who began work today, Tuesday. Woods is single and claims one withholding allowance. She is employed as a programmer at a monthly salary of $2,600. Address, 8102 Franklin Court, Philadelphia, PA 19105- 0915. Telephone, 555-1128. Social Security No. 000-00-1587. She is eligi- ble for group insurance coverage of $47,000 immediately, although her first deduction for group insurance will not be made until December 18. Department: Office tDepartment: $600.00 Weekly rate: $600.00 Hourly rate: $15.00 November 18 No. 14 Deposit with the state of Pennsylvania the amount of state income taxes withheld from the November 6 and 13 (Ruth Williams) payrolls and complete the information worksheet. November 20 No. 15 With this pay, the company has decided to offer employees a Savings In- centive Match Plan (SIMPLE Retirement Plan). Most of the employees opted to wait until the start of the following year to participate. How ever, the following employees have decided to take part in the plan for the remaining pay periods of the year. lames Ferguson Dewey Mann $500 contribution per pay period 250 contribution per pay peried 5700 contribution per pay peried 200 contribution per pay period Norman Ryan The contributions are to be deducted from the participating employees pay and are excluded from the employee's income for federal income tax purposes. The other payroll taxes still apply. On the payroll registers the earnings record, use the blank column under Deductions" for these contributions. Use the term "SIMPLE" as the new heading for this deduc tion column (on both the payroll register and employee's earnings re Use the account in the general ledger for SIMPLE Contributions Pay- able-account no. 29 The company must match these contributions dollar for dollar, up to 3 percent of the employee's compensation. These payments will be proc essed through the Accounts Payable Department. Prepare the payroll for the last pay period of November from T Clerk's Report employees. Also, record the employer's payroll taxes. Nos. 44 and 45, and record the paychecks issued all Time Clerk's Report No. 44 For the Week Ending November 7, 20 Time Record Time Time Employee S M T WTFS Worked Lost Bonno, A. V Ford, C. L Russell, V. A. Ryan, N. A. Student Williams, R. V 40 hrs. 40 hrs. 38 hrs. 2hrs 40 hrs. 36 hrs. 34 hrs. 6hrs.." Time lost for personal business; deduct 2 hours' pay "Time lost because of tardiness; deduct 6 hours' pay Time Clerk's Report No. 45 For the Week Ending November 14, 20 Time Time EmployeeTime Record s M TWTF S Worked Lost 24 hrs.. Bonno, A. V Ford, C. L Russell, V. A. Ryan, N. A. Student Williams, R. V 40 hrs. 40 hrs. 40 hrs. 36 hrs. D D 8 6 8 22 hrs. 18 hrs." Time lost because of tardiness: deduct 2 hours' pay. Unexcused absences, deduct 16 hours pay No. 16 Salary increases of $30 per week, effective for the two weeks covered in the December 4 payroll, are given to Catherine L. Ford and Virginia A. Russell. The group insurance coverage for Ford will be increased to S50,000; for Russell, it will be increased to $49,000. Update the employ- es' earnings records accordingly. The new wage rates are listed below Employee Frd, Catherine L. Russell, Virginia Weely Rate $640.00 630.00 Hourly Rate $16.00 15.75 No. 20 Anthony V. Bonno reports the birth of a son and completes an amended Form W-4, showing his total withholding allowances to be five. Change his earnings record accordingly, effective with the December 18 pay. No. 21 Both Anthony Bonno and Norman Ryan have been notified that their union dues will increase to $9 per pay, starting with the last pay period of the year. Reflect these increases in the December 18 pay and show the changes on their earnings records December 9 No. 22 Pay the treasurer of the union the amount of union dues withheld during the month of November. December 11 No. 23 The Payroll Department was informed that Virginia A. Russell died in an automobile accident on her way home from work Thursday, December 10. December 14 No. 24 D Make a separate entry (on one line) in the payroll register to record the issuance of a check payable to the Estate of Virginia A. Russell. This check covers Russell's work for the weeks ending December 5 and 12 ($1,134.00) plus her accrued vacation pay ($1,260.00). Do not show the vacation hours in the Time Record columns on the payroll register, but include them in the Total Earnings column. Russell's final biweekly pay for time worked and the vacation pay are sub- ject to FICA, FUTA, and SUTA (employer and employee) taxes. Since Russell's cumulative earnings have surpassed the taxable earnings figures established by FUTA and SUTA, there will not be any unemployment tax on the employer. The deduction for group insurance premiums is S14.70. o Make a notation of Russell's death in the payroll register and on her earnings record. o Prepare journal entries to transfer the net pay and to record Russell's final pay and the employer's payroll taxes. Post to the ledger accounts. Include the final gross pay ($2,394.00) in Boxes 3 and 5, but not in oxes 1, 16, and 18. Use the blank Form W-2 on page 7-60. In addition, the last wage payment and vacation pay must be reported on Form 1099-MISC. A Form 1096 must also be completed. These forms will be completed in February before their due date. (See Transac- tion Nos. 41 and 42 on page 7-67.) December 15 No. 25 Electronically deposit the amount of FICA taxes and federal income taxes for the November payrolls and complete the Federal Deposit Information Worksheet. No. 26 Deposit with the city of Philadelphia the amount of city income taxes withheld from the November payrolls. December 18 No. 27 Deposit with the state of Pennsylvania the amount of state income taxes withheld from the December 4 payroll and complete the information worksheet. No. 28 Glo-Brite has been notified by the insurance company that there will be no premium charge for the month of December on the policy for Virginia Russell. Prepare the entry for the check made payable to the estate of Virginia A. Russell, for the amount that was withheld for insurance from her December 14 pay. No. 29 Prepare an employee's earnings record for Richard Lloyd Zimmerman, who was employed today as time clerk to take the place left vacant by the death of Virginia A. Russell last week. His beginning salary is $2.600 per month. Address, 900 South Clark Street, Philadelphia, PA 19195 6247. Telephone, 555-2104. Social Security No. 000-00-1502. Zimmer man is married and claims one withholding allowance. Zimmerman is eligible for group insurance coverage of $47,000, although no deduction for group insurance premiums will be made until the last payday in January Department: Office Weekly rate: $600.00 Hourly rate: $15.00 No. 30 Prepare the payroll for the latter pay of December from Time Clerk's Report Nos. 48 and 49 and record the paychecks issued all employees Also, record the employer's payroll taxes. Effective with this pay, O'Neill completed a new Form W-4, changing his total withholding allowances to four. Previously, he had claimed fewer allowances than he had been using on his tax return. Change his earnings record accordingly In this pay, the president of the company, Joseph O'Neill, is paid his an- nual bonus. This does not affect O'Neill's insurance coverage, which is based on regular pay. This year, his bonus is $75,000. For withholding purposes, the bonus is considered a supplemental payment and is added to his gross pay, and the aggregate amount is taxed. For this pay, O'Neill has increased his SIMPLE deduction to $4,000. To determine the federal income tax, use the Table of Allowance Values along with Tax Table A (pages T-2 to T-4). In calculating the tax, do not round the aggregate to the nearest earnings dollar. In this pay, O'Neill has reached the OASDI ceiling. To calculate O'Neill's OASDI tax, multiply the OASDI ceiling of $118,500 by 6.2 percent and then subtract the year-to- date OASDI taxes withheld up to this pay. Note: After posting the information for this last pay to the employees' earnings records, calculate and enter the quarterly and yearly totals on each eanings record. Time Clerk's Report No. 48 For the Week Ending December 5, 20 EmplovesTime Record Time Time Bonno, A. V. Ford, C. L Russell, V. A. Ryan, N. A. Student Woods, B. A. 44 hrs 40 hrs 40 hrs 44 hrs 35 hrs. 1 40 hrs 40 hrs 4 888 8 8 ng Time lost because of tardiness; deduct I hours pay WASHINGTON UPDATE EMPLOYERS IN "CREDIT REDUCTION" STATES MUST CALCULATE A CREDIT REDUCTION AS AN ADJUSTMENT TO THEIR FUTA TAX ON THEIR FORM 940 EMPLOYER'S ANNUAL FEDERAL UNEMPLOYMENT (FUTA) TAX RETURN. CREDIT REDUCTION STATES ARE STATES THAT DID NOT REPAY THE MONEY THEY BORROWED FROM THE FEDERAL GOVERNMENT TO PAY UNEMPLOYMENT BENEFITS. EPLOYERS IN THESE STATES MUST USE SCHEDULE A (FORM 940) TO COMPUTE THE CREDIT REDUCTION, IN 2016 PENNSYLVANIA WAS NOT A CREDIT REDUCTION STATE D Complete Form 940, Employer's Federal Unemployment (FUTA) Tax Return, using the blank forms reproduced on pages 7-57 and 7-58. Also, complete the Federal Deposit Information Worksheet, using the blank form reproduced on page 7-50. No. 36 a. Total wages for the first three quarters was $142,224.57. FUTA tax- able wages for the first three quarters was $65,490.00. b. FUTA tax liability by quarter: 1st quarter-$204.53 2nd quarter-$105.25 3rd quarter-$83.16 The first FUT A deposit is now due., c. Journalize the entry to record the electronic deposit for the FUTA tax liability No. 37 O Prepare Form UC-2, Employer's Report for Unemployment Compensa- tion-Fourth Quarter, using the blank form reproduced on page 7-59. In Pennsylvania, a credit week is any calendar week during the quarter in which the employee earned at least $50 (without regard to when paid). The maxi- mum number of credit weeks in a quarter is 13. The telephone number of the company is (215) 555-9559. All other information needed in the form can be obtained from the ledger accounts, the payroll registers, and the employees' carnings records o Journalize the entry to record the payment of the taxes for the fourth quarter. preparing No. 38 Complete Form W-2, Wage and Tax Statement, for each current em- ployee, using the blank statements reproduced on pages 7-61 to 7-65 Use each employee's earnings record to obtain the information needed to complete the forms. The two plant workers (Bonno and Ryan) have had $121.00 in union dues withheld during the year. No. 39 Complete Form W-3, Transmittal of Wage and Tax Statements, using the blank form reproduced on page 7-66. Use the information on a Forms W-2 to complete this form. No. 40 Complete Pennsylvania Form REV-1667, W-2 Transmittal, using the blank form reproduced on page 7-66. Use the information on Forms W-2 to complete this report. The wages paid and the Pennsylvania tax withheld for the first three quarters are: 1st 2nd 3rd 534,088.75 45,535.62 %2600.20 1,046.52 $1,397.94 $1,921.83 QUESTIONS ON THE PAYROLL PROJECT 1. The total payroll tax expense incurred by the employer on salaries and wages 2. The total payroll tax expense incurred by the employer on the total earnings 3. The amount of the group insurance premiums collected from employees d 4. O'Neill has decided to give all current employees (excluding himsef) a bonus paid during the quarter ended December 31 wa of Joseph T. O'Neill during the fourth quarter was ing the quarter ended December 31 was payment during January equal to 5% of their total gross pay for last year. Determine the total of this bonus payment... On the financial statements prepared at the end of its first year of operations, he company must show an accurate picture of all expenses and all liabilities incurred. The last payday of the year was December 18. However, the pay ment to the employees on that day did not include the weeks ending Decem- ber 19 and 26 and the four days (December 28-31) in the following week. These earnings will be reflected in the January payrolls. Two-column journal paper is provided for use in journalizing the following entry on page 7-23 S. Prepare the adjusting entry as of December 31 to record the salaries and wages that have accrued but remain unpaid as of the end of the year. When calculating the amount of the accrual for each hourly worker, assume each employee worked eight hours on each day during the period with no over time (student works a 36-hour week-student worked 32 hours for the pe- riod December 28 through December 31). For each salaried worker, the accrual will amount to 14/10 of the worker's biweekly earnings, except for Zimmerman who worked only 10 days. Each of the labor cost accounts should be debited for the appropriate amount of the accrual, and Salaries and Wages Payable should be credited for the total amount of the accrual. There is no liability for payroll taxes on the accrued salaries and wages until the workers are actually paid. Therefore, the company follows the practice of not accruing payroll taxes. 6. Also, prepare the adjusting entry as of December 31 to record the accrued vacation pay as of the end of the year. Record the expense in a vacation ben efits expense account, and credit the appropriate liability account. Use the journal paper provided As of December 31, the vacation time earned but not used by each em- ployee is listed here. 80 hours three weeks two weeks Ferguson Ford Mann.one week O'Neill Ryan Sokowski.. two weeks four weeks 80 hours 72 hours Wood.none Young Zimmerman none none HAPTER 7 Payroll Project JOURNAL Page POST. REF DESCRIPTION DEBIT DATE CREDIT JOURNAL CREDIT POST. DEBIT REF 7-32