Accounting Assignment
PART I: SHORT RESPONSE
Directions: Please respond to each of the following questions. Write at least 3 to 5 sentences for each question.
1. Compare and contrast an employee and an independent contractor.
2. Explain the difference between gross and net pay, including how each is calculated.
3. Define taxable earnings, how they relate to the payroll register, and how they are calculated.
4. Explain the similarities and differences in the payroll register and the employee's individual earnings record.
5. Explain what the debit to the Payroll Tax Expense account consists of, how it is determined, and when it is recorded.
6. Explain why employers might not be enthusiastic about employee requests for pay raises, aside from obvious reasons of the cost of the pay raise itself.
7. Compare and contrast payroll Forms 940 and 941.
8. Explain the difference between Form W-2 and W-4 including why each form is needed by employers to complete payroll activities.
PART II: APPLICATION
Directions: Please answer each of the following questions. Show your work as necessary.
1. James Company has the following payroll information for the week ended December 20:
Taxable earnings for Social Security are based on the first $106,800. Taxable earnings for Medicare are based on all earnings. Taxable earnings for federal and state unemployment are based on the first $7,000. Employees are paid time-and-a-half for work in excess of 40 hours per week.
Instructions:
1. Complete the payroll register below. Use 4.2 percent for calculating Social Security tax and 1.45 percent for calculating Medicare tax.
2. Based on the payroll register you created, prepare the journal entry to record the payroll for the week of December 20, 20--.
2. Alpine Homes has the following payroll information for the week ended June 30. State income tax is computed as 20 percent of federal income tax.
Taxable earnings for Social Security are based on the first $106,800. Taxable earnings for Medicare are based on all earnings. Taxable earnings for federal and state unemployment are based on the first $7,000. Employees are paid time-and-a-half for work in excess of 40 hours per week.
Instructions:
1. Complete the payroll register. The Social Security tax rate is 4.2 percent, and the Medicare tax rate is 1.45 percent. Begin payroll checks with No. 2944.
2. Prepare a general journal entry to record the payroll on June 30. The firm's general ledger contains a Wages Expense account and a Wages Payable account.
3. Assuming that the firm has transferred funds from its regular bank account to its special payroll bank account, and that this entry has been made, prepare a general journal entry to record the payment of wages on June 30.
3. T. Powell, an employee of Daisy's Day Care, worked 48 hours during the week of August 30. Her rate of pay is $21.50 per hour, and she receives time-and-a-half for work in excess of 40 hours per week. T. Powell is single and claims zero allowances on her W-4 form. Her YTD earnings before this pay period are $34,850 with wages subject to the following deductions:
a.) Federal income tax, $152.
b.) Social Security tax at 4.2 percent, with a wage limit of $106,800.
c.) Medicare tax at 1.45 percent.
d.) Medical insurance premium (after tax), $80.
e.) United Way contribution. $55.
Instructions:
1. Compute T. Powell's regular pay, gross pay, and net pay.
2. Record this pay information in T. Powell's employee earnings record, using check number 152.
4. Ice Cold Storage has the following payroll information for the week ended November 20. State income tax is computed as 20 percent of federal income tax. Use page 77 for general journal.
Assumed tax rates are as follows:
a. FICA: Social Security, 4.2 percent for each employee and 6.2 percent for the employer (on the first $106,800), and Medicare, 1.45 percent on all earnings for each employee.
b. State unemployment tax, 5.4 percent on the first $7,000 for each employee.
c. Federal unemployment tax, 0.6 percent on the first $7,000 for each employee.
Instructions:
1. Complete the payroll register. Payroll checks begin with Ck. No. 6307 in the payroll register.
2. Prepare a general journal entry to record the payroll as of November 20. The company's general ledger contains a Salary Expense account and a Salaries Payable account.
3. Prepare a general journal entry to record the payroll taxes as of November 20.
4. Journalize the entry to pay the payroll on November 22. (Assume that the company has transferred cash to the Cash Payroll Bank Account for this payroll.)
5. Hardy Company has the following balances in its general ledger as of September 1 of this year:
1. FICA Taxes Payable (liability for August), $1,150.00 (employee and employer).
2. Employees' Federal Income Tax Payable (liability for August), $908.00.
3. Federal Unemployment Tax Payable (liability for July and August), $215.00.
4. State Unemployment Tax Payable (liability for July and August), $1,262.75.
The company completed the following transactions involving the payroll during September and October:
Sept. 13 Issued check payable to City Bank for the monthly deposit of August FICA taxes and employees' federal income tax withheld.
30 Recorded the payroll entry in the general journal from the payroll register for September. The payroll register has the following column totals:
30 Recorded payroll taxes. Employer pays appropriate FICA taxes. State unemployment tax is 5.4 percent, and federal unemployment tax is 0.6 percent. At this time, all employees' earnings are taxable for FICA and unemployment taxes.
30 Issued check from Cash Payroll Bank Account to pay salaries for the month.
Oct. 14 Issued check payable to City Bank for the monthly deposit of September FICA taxes (employee and employer matching) and employees' federal income tax withheld.
31 Issued check payable to the State Tax Commission for state unemployment tax for July, August, and September. The check was accompanied by the quarterly tax return.
31 Issued check payable to City Bank for the deposit of federal unemployment tax for the months of July, August, and September.
Instructions:
Record the transactions in the general journal, pages 41-42.
6. Wilson Construction Company receive and paid a premium notice on January 5 for workers' compensation insurance stating the rates for the new year. Estimated employees' earnings for the year are as follows:
Instructions:
1. Record the entry in general journal for the January 5 payment of estimated premium.
2. Record the adjusting entries on December 31 for the insurance expired and for the additional premium.
Attachment:- Accounting_Assignment.rar