Paystub Mistakes Assignment

New employees rely on the payroll accounting professional to help them understand their pay check. Quite often candidates are wooed into new positions with starting salaries that seem impressive but the amount looks much smaller when divided by pay periods with taxes, insurance and retirement removed from the amount. Hope Kingsley is a new employee at Some Corporation, where she began working January 2, 2023, the first Monday of the first pay period for the year. She has just received her 8th paycheck of the year and have noticed a few issues she would like some help with. Your job is to find those mistakes, explain what the mistake actually is (i.e. tax is calculated wrong, ytd amounts are wrong, etc.), and fix it (i.e. calculate the correct amount of tax, etc.)

There are a total of 10 mistakes on this paystub. Each mistake that you identify, explain, and fix, is worth 5 points, for a total possible of 50 points.

Please assume the following: All names and addresses are correct. The Married status and the allowances for both Federal and State are correct. The fact that she worked 80 hours in the 2-week pay period is correct. Her Gross Pay for this pay period and the Year-To-Date Gross Pay is correct. The amounts deducted for Health, Dental, and Retirement are also correct for both this pay period and the Year-To-Date. The Health and Dental deductions are not exempt from any taxes and, therefore, should not be subtracted from the income before you calculate any taxes.

Additional Facts Needed: Some Corporation pays it employees bi-weekly, with the pay period beginning on a Monday and ending on a Sunday. The company uses the Percentage Method to calculate ALL Federal Income Tax. NOTE: You MUST use the Tax Tables provided in the textbook for the Federal Income Tax titled 2022 Percentage Method Tables for Manual Payroll Systems with Forms W-4 from 2020 or Later (Tax Table A in Textbook). Do NOT use an outside source. You need to do a quick Google search to verify the State Income Tax rate for Michigan. The paychecks are distributed the Friday following the end of the pay period. ALL employees of the company are paid on an hourly basis. Below is the 8th paycheck of 2023 for Hope Kingsley, a brand new, hourly employee.

NOTE: The format of the paystub is correct! Please do not get hung up on the wording of the items on the paystub or the format of how that information is displayed! Every company formats their paystubs a little differently!

One additional mistake has been corrected for you so you can see how this assignment is supposed to be completed. Please note that the bi-weekly amounts and the year-to-date amounts should be considered SEPARATE mistakes, not one big mistake.

IMPORTANT: YOU MUST SHOW YOUR ENTIRE CALCULATIONS WHEN CORRECTING THE MISTAKES. SIMPLY GIVING YOUR UPDATED AMOUNT IS NOT ACCEPTABLE AND YOU WILL LOSE POINTS!

Please review the check stub below and identify, explain, and fix the 10 mistakes:

Ex.) Hourly rate is incorrect. Should be stated as earnings per hour, not total earnings for the pay period. $1,200 gross pay / 80 hours worked = $15 correct hourly rate. You can NOT include this as one of your mistakes!

Some Corporation Earnings Statement 123 Somewhere Drive Ann Arbor, MI 48104 Hope Marie Kingsley 8670 Rogerson Drive Ann Arbor, MI 48104 Employee ID Number 98856 Job Title Administrative Assistant Social Security Number XXX-XX-6789 Department Number K7890 Pay Period 4/10/2023 4/23/2023 Pay Date 4/28/2023 Taxable Marital Status Married Filing Jointly Withholding Method: Federal Standard State Standard Earnings Rate Hours This Period Year To Date 1,200.00 80 1,200.00 9,600.00 Gross Pay 1,200.00 9,600.00 Deductions Federal Income Tax 121.99 975.92 State Income Tax 79.68 637.44 Social Security Tax 18.64 149.12 Medicare Tax 65.63 525.04 Health 76.58 612.64 Dental 26.56 212.48 Retirement* 150.00 1,200.00 Net Pay 660.92 5,287.36 * Excluded from federal and state income taxes only. Not excluded from FICA taxes