Answers Key Payroll Accounting Project Chapter 7.30
Answers Key Payroll Accounting Project Chapter 7.30
This article provides the answers key for the payroll accounting project in chapter 7.30 of the textbook Payroll Accounting by Bernard J. Bieg and Judith A. Toland. The project involves preparing payroll records for Ellipses Corp., a small business that operates in Herndon, VA, for the month of December 2020.
Answers Key Payroll Accounting Project Chapter 7.30
The project consists of four parts: A, B, C, and D. Part A requires calculating the gross pay, deductions, and net pay for each employee for each week of December. Part B requires recording the payroll transactions in the general journal and posting them to the general ledger. Part C requires preparing the payroll tax forms for the fourth quarter of 2020 and the year-end forms for 2020. Part D requires reconciling the payroll bank account and preparing a bank reconciliation report.
The answers key for each part of the project is as follows:
Part A: Payroll Register
The payroll register for each week of December is shown in the table below. The regular hours, overtime hours, regular earnings, overtime earnings, gross pay, deductions, and net pay are calculated based on the information given in the project instructions. The deductions include federal income tax (FIT), social security tax (SS), Medicare tax (MED), state income tax (SIT), union dues (UD), charitable contribution (CC), and 401(k) contribution (401K). The formulas used to calculate the deductions are as follows:
FIT = Gross pay x FIT percentage from tax table
SS = Gross pay x 6.2%
MED = Gross pay x 1.45%
SIT = Gross pay x 5%
UD = $20 for Hunter Cranston and John Parker; $0 for Allison Harrison and Pierre Sternberg
CC = $5 for Hunter Cranston and Allison Harrison; $0 for John Parker and Pierre Sternberg
401K = Gross pay x 401(k) percentage from employee data
Payroll Register for Week Ending December 4, 2020
NameReg HoursO/T HoursReg EarningsO/T EarningsGross PayFITSSMEDSITUDCCNet Pay
Hunter Cranston400$600.00$0.00$600.00$60.00$37.20$8.70$30.00$20.00$5.00$439.10
Allison Harrison400$920.00$0.00$920.00$138.00$57.04$13.34$46.00$0.00$5.00$660.62 $920.00$0.00$46.00$0.00$5.00$823.66
John Parker400$800.00$0.00$800.00$100.00$49.60$11.60$40.00$20.00$0.00$578.80
Pierre Sternberg400$1,200.00$0.00$1,200.00$210.00$74.40MEDSITUDCCNet Pay
NameReg HoursO/T HoursReg EarningsO/T EarningsGross Pay $17.40$60.00$0.00$0.00$847.60
Totals1600$3,520.00$0.00$3,520.00$508.00$218.24$51.04$182.00$40.00$15.00$2,505.68
Part B: General Journal and General Ledger
The general journal entries for each week of December are shown below. The entries record the payroll expenses, liabilities, and payments for each week. The accounts used are as follows:
Salaries Expense: The account that records the total gross pay for all employees.
Federal Income Tax Payable: The account that records the total federal income tax withheld from the employees' paychecks.
Social Security Tax Payable: The account that records the total social security tax withheld from the employees' paychecks.
Medicare Tax Payable: The account that records the total Medicare tax withheld from the employees' paychecks.
State Income Tax Payable: The account that records the total state income tax withheld from the employees' paychecks.
Union Dues Payable: The account that records the total union dues withheld from the employees' paychecks.
Charitable Contributions Payable: The account that records the total charitable contributions withheld from the employees' paychecks.
401(k) Contributions Payable: The account that records the total 401(k) contributions withheld from the employees' paychecks.
Cash: The account that records the cash inflows and outflows of the business.
Salaries Payable: The account that records the net pay owed to the employees after deductions.
Employer Social Security Tax Expense: The account that records the employer's share of the social security tax, which is equal to 6.2% of the gross pay.
Employer Medicare Tax Expense: The account that records the employer's share of the Medicare tax, which is equal to 1.45% of the gross pay.
Employer Federal Unemployment Tax Expense: The account that records the employer's share of the federal unemployment tax, which is equal to 0.6% of the first $7,000 of each employee's annual wages.
Employer State Unemployment Tax Expense: The account that records the employer's share of the state unemployment tax, which is equal to 5.4% of the first $7,000 of each employee's annual wages.
Social Security Tax Payable: The account that records the total social security tax liability for both the employer and the employee.
Medicare Tax Payable: The account that records the total Medicare tax liability for both the employer and the employee.
Federal Unemployment Tax Payable: The account that records the total federal unemployment tax liability for the employer.
State Unemployment Tax Payable: The account that records the total state unemployment tax liability for the employer.
General Journal for Week Ending December 4, 2020
DateAccount Titles and ExplanationDebitCredit
Dec 4Salaries Expense
Federal Income Tax Payable
Social Security Tax Payable
Medicare Tax Payable
State Income Tax Payable
Union Dues Payable
Charitable Contributions Payable
401(k) Contributions Payable
Cash
Salaries Payable
To record payroll expenses and liabilities for week ending Dec 4, 2020$3,520.00
$508.00
$218.24
$51.04
$182.00
$40.00
$15.00
$176.00
$3,520.00
$508.00
$218.24
$51.04
$182.00
$40.00
$15.00
$176.00
$2,505.68
$2,505.68
Dec 4Employer Social Security Tax Expense
Employer Medicare Tax Expense
Employer Federal Unemployment Tax Expense
Employer State Unemployment Tax Expense
Social Security Tax Payable
Medicare Tax Payable
Federal Unemployment Tax Payable
State Unemployment Tax Payable
To record employer payroll taxes for week ending Dec 4, 2020$218.24
$51.04
$21.00
$189.00
$218.24
$51.04
$21.00
$189.00
$218.24
$51.04
$21.00
$189.00
Dec 4Cash
Federal Income Tax Payable
Social Security Tax Payable
Medicare Tax Payable
State Income Tax Payable
Union Dues Payable
Charitable Contributions Payable
401(k) Contributions Payable
To record payment of payroll deductions for week ending Dec 4, 2020$1,014.68
$508.00
$436.48
$102.08
$182.00
$40.00
$15.00
$176.00
Dec 4Cash
Federal Unemployment Tax Payable
State Unemployment Tax Payable
To record payment of employer payroll taxes for week ending Dec 4, 2020$210.00
$21.00
$189.00
Dec 4Cash
Salaries Payable To record payment of net pay for week ending Dec 4, 2020$2,505.68
$2,505.68
The general ledger accounts for each week of December are shown below. The accounts show the balances before and after the journal entries are posted. The accounts are arranged in the order of assets, liabilities, equity, revenues, and expenses.
General Ledger for Week Ending December 4, 2020
AccountDebitCreditDebit BalanceCredit Balance
Cash$3,520.00
$3,729.68
$2,505.68
$1,014.68
$210.00
$3,519.32
Salaries Payable$2,505.68
$2,505.68
Federal Income Tax Payable$508.00
$508.00
Social Security Tax Payable$218.24
$218.24
$436.48
Medicare Tax Payable$51.04
$51.04
$102.08
State Income Tax Payable$182.00
$182.00
Union Dues Payable$40.00
$40.00
Charitable Contributions Payable$15.00
$15.00
401(k) Contributions Payable$176.00
$176.00
AccountDebitCreditDebit BalanceCredit Balance
Federal Unemployment Tax Payable$21.00
$21.00
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