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 5.4% on the first $9,000 of earnings.

Federal Unemployment tax rate 0.6% 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	120	4
Kathryn B. Jones	120	0
Salaried Employee:
Lolita L. Lovely	$6,000 per Month

1. 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.

1. 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-11T and UI-11W)

Electronic Files