3 Total earnings, 540,000 Current Liabilities and Payroll

Chapter 10 Current Liabilities and Payroll

481 EX 10-12 Payroll entries OBJ. 3 The payroll register for Jaffrey Company for the week ended May 16 indicated the fol- lowing: Salaries 1,250,000 Social security tax withheld 58,750 Medicare tax withheld 18,750 Federal income tax withheld 250,000 In addition, state and federal unemployment taxes were calculated at the rate of 5.4 and 0.8, respectively, on 225,000 of salaries. a. Journalize the entry to record the payroll for the week of May 16. b. Journalize the entry to record the payroll tax expense incurred for the week of May 16. EX 10-13 Payroll entries OBJ. 3 Widmer Company had gross wages of 240,000 during the week ended June 17. The amount of wages subject to social security tax was 240,000, while the amount of wages subject to federal and state unemployment taxes was 35,000. Tax rates are as follows: Social security 6.0 Medicare 1.5 State unemployment 5.4 Federal unemployment 0.8 The total amount withheld from employee wages for federal taxes was 48,000. a. Journalize the entry to record the payroll for the week of June 17. b. Journalize the entry to record the payroll tax expense incurred for the week of June 17. EX 10-14 Payroll internal control procedures OBJ. 3 Big Howie’s Hot Dog Stand is a fast-food restaurant specializing in hot dogs and hamburg- ers. The store employs 8 full-time and 12 part-time workers. The store’s weekly payroll averages 5,600 for all 20 workers. Big Howie’s Hot Dog Stand uses a personal computer to assist in preparing paychecks. Each week, the store’s accountant collects employee time cards and enters the hours worked into the payroll program. The payroll program calculates each employee’s pay and prints a paycheck. The accountant uses a check-signing machine to sign the paychecks. Next, the restaurant’s owner authorizes the transfer of funds from the restaurant’s regular bank account to the payroll account. For the week of May 12, the accountant accidentally recorded 100 hours worked instead of 40 hours for one of the full-time employees. Does Big Howie’s Hot Dog Stand have internal controls in place to catch this error? If so, how will this error be detected? EX 10-15 Internal control procedures OBJ. 3 Dave’s Scooters is a small manufacturer of specialty scooters. The company employs 14 production workers and four administrative persons. The following procedures are used to process the company’s weekly payroll: a. Whenever an employee receives a pay raise, the supervisor must fill out a wage adjust- ment form, which is signed by the company president. This form is used to change the employee’s wage rate in the payroll system. b. All employees are required to record their hours worked by clocking in and out on a time clock. Employees must clock out for lunch break. Due to congestion around the time clock area at lunch time, management has not objected to having one employee clock in and out for an entire department. Continued Copyright 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook andor eChapters. Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.