This exercise is a review of the EMPLOYEES & PAYROLL, PAYABLES and COMPANY modules.

1.Refer to Exercise 1-1b to unzip the07 C7-1 Carpets.exefile. 2.Open the07 C7-1 Carpetsfile.

Payroll information:

• All employees are paid bi-weekly.
• Overtime is paid at time and a half (regular pay, plus regular pay).
• Vacation pay (4%) is retained from hourly and commission employees until the employee takes a vacation. Vacation pay is not calculated or retained for salaried employees.
• The EI rate is 1.4% times the employee deductions.
• It is assumed that the employer is exempt from the Employee Health Tax (EHT).
• Union dues are deducted from hourly and commission employees' paycheques.
• The company does not have a pension plan.
• The company allows employees to receive a payroll loan up to $700.00 for extenuating circumstances. The loan is repayable by all employees at $20.00 per pay. Hardeep Singh has a $500.00 loan owing at January 1.
• Commission employee Vibeke Ipanaque is on a medical leave of absence and is expected back to work by the middle of January.

3. RecordandPostthe following transactions for January:

Jan 2 Change employee "A-YOUR ACTUAL LAST, First Name" to your own name before processing payroll transactions.

Jan 2 Memo 1-YM, received from Owner, to reverse the Accrued Payroll Payable entry created in the previous year. See the January 1 Trial Balance. (There was no accrual for commission employees.)

Jan 3 Pay by Payroll Cheque Run, pay period effective today: Hardeep Singh: 80 hours, she is repaying her loan by $20.00 per pay Herve Lions: 80 hours and 1 hour overtime A-YOUR ACTUAL LAST, First Name: salary (80 hours per period)

Jan 3 Hardeep Singh (normally paid bi-weekly) will go on a one-week vacation starting today. She will return on January 13. As discussed in the chapter, change the pay periods to 52 and then issue a vacation paycheque (40 hours), $650.00 of the amount accrued. Use the Paycheques icon to pay the Vacation Pay. Union dues and/or loan repayments are not deducted on vacation pay.

Jan 3 Manager called Herve Lions to advise him his cheque was incorrect. He had been 2 hours late for work on January 2, and the cheque should have been for 79 hours at his regular wage rate. Received and reversed original cheque. Issued a corrected cheque.

Jan 13 Vibeke Ipanaque and Hardeep Singh both returned to work today. They will each be working just one week in this pay period (ending Jan. 17). Make sure their employee setup reflects this (Income tab) to ensure taxes will be deducted properly. Return Vibeke Ipanaque to "Active Employee" status.

Jan 13 Canada Revenue Agency (CRA) payroll auditor arrived today to do an audit on the previous year's payroll records.

Jan 15 The payroll auditor verified that the previous year's files and records were in order. The manager approved issuing the next cheque to the Receiver General, for December 31, amount owing for PAYROLL amounts (Trial Balance amounts at January 1).

Jan 17 Pay byPayroll Cheque Run, pay period effective today. Singh, Hardeep: for 40 hours. She is repaying her loan by $20.00 per pay Ipanaque, Vibeke: for $912.00 commission for 40 hours Lions, Herve: for 80 hours and 1 hour overtime A-YOUR ACTUAL Last, First Name: salary (80 hours per period)

After the payroll cheque run is completed, return Vibeke and Hardeep to 26 pay periods per year.

Jan 20 The owner has given you a memo to update the accounting records by recording a payroll accrual for $976.00 salary and $350.00 commission, for the period ending today. The owner needs the reports, listed below, for a meeting with the bank.

4. Printthe following reports for the manager for his meeting with the bank manager.

• a) Balance Sheet
• b) Income Statement (All amounts will be zero, except for payroll)
• c) Payroll Journal Entries, with corrections, to January 20
• d) All Journal Entries, with corrections, for the same period
• e) General Journal Entries for the same period
• f) Cheque log for January 1 to January 20. Show Corrections.