CHAPTER 7
Employee Earnings and Deductions
SOLUTION
GENERAL JOURNAL
DATE
1
2
20—
July
3
4
5
6
7
8
9
10
11
DESCRIPTION
PAGE
POST.
REF.
DEBIT
CREDIT
1
31 Salary Expense
Employees' Federal Income Tax Payable
FICA Taxes Payable
($248.00 + $223.20 + $58.00 + $52.20)
United Way Payable
Cash
Paid salaries for the month
(D. C. Garcia, $3,114.83, Ck. No.
6701; T. C. Bennett, $2,938.43,
Ck. No. 6702).
7,600.00
2
582.34
581.40
3
4
5
383.00
6,053.26
12
6
7
8
9
10
11
12
DISCUSSION QUESTIONS
Suggested Responses
292
1.
The employee’s individual earnings record satisfies a government requirement and is
a source of information for each employee’s W-2 form.
2.
An employee’s individual earnings record contains current data on that employee’s
earnings, deductions, and net pay for all pay periods, as well as cumulative earnings.
3.
The purpose of the payroll register is to summarize the information about employees’
wages and salaries, withholdings, and deductions for a period of time.
4.
An employee’s gross earnings are the total earnings before any deductions. Net
earnings are the earnings remaining after deductions have been made and represent
the employee’s take-home pay.
5.
One check for the entire payroll is drawn from the regular bank account and
deposited in a special payroll bank account. This avoids overloading a company’s
regular bank account with numerous payroll checks, and it makes the bank statement
for the regular bank account easier to reconcile.
6.
Possible required deductions are federal income taxes, state income taxes, Social
Security taxes, and Medicare taxes. Possible voluntary deductions are medical
insurance premiums, union dues, charitable contributions, and payments to 401(k)
plans.
7.
An employee is a person who works under the direction and control of an employer. An
independent contractor is a person who is engaged for a definite job or service and may
choose his or her own means of doing the work. Examples of independent contractors are
electricians, doctors, lawyers, architects, plumbers, exterminators, and carpenters who are
not considered employees of a company.
8.
To use the wage-bracket withholding table, you need to know the employee’s wage,
filing status, number of exemptions, and frequency of pay. The tables are found in
IRS Publication 15-T (formerly in Publication 15 (Circular E), Employer’s Tax
Guide).
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 7
Employee Earnings and Deductions
SOLUTIONS TO EXERCISES
Exercise 7-1
a.
b.
40 hours at straight time × $21.60 per hour
4 hours overtime × $32.40 per hour
$864.00
129.60
Total gross pay
$993.60
40 hours at straight time × $25.00 per hour
10 hours overtime × $37.50 per hour
$1,000.00
375.00
Total gross pay
$1,375.00
c.
$20,885 × 0.08
$1,670.80
d.
$81,600 ÷ 52 weeks = $1,569.23 per week
$1,569.23 per week ÷ 40 hours = $39.23 per regular hour
40 hours at straight time × $39.23 per hour
$1,569.20
176.55
3 hours overtime × $58.85 per hour
$1,745.75
Exercise 7-2
a.
40 hours at straight time × $37.00 per hour
b.
10 hours overtime × $55.50 per hour
$1,480.00
555.00
c.
Total gross pay
$2,035.00
d.
Federal income tax withholding
e.
Social Security tax withholding at 6.2 percent
f.
Medicare tax withholding at 1.45 percent
g.
Total withholding
h.
Net pay
$256.81
126.17
29.51
412.49
$1,622.51
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
293
Aston, F. B.
Dwyer, S. J.
Flynn, K. A.
Harden, J. L.
Nguyen, H.
Totals
294
Axton, C.
Edgar, E.
Gorman, L.
Jolson, R.
Nixel, P.
EMPLOYEE
Exercise 7-5
1.
2.
3.
4.
5.
6.
Exercise 7-4
a.
b.
c.
d.
e.
EMPLOYEE
$ 900.00
920.00
1,110.00
1,025.00
925.00
$4,880.00
$ 71.00
64.00
82.00
100.00
64.00
$381.00
FEDERAL
INCOME
TAX
WITHHELD
$ 55.80
57.04
68.82
63.55
57.35
$302.56
SOCIAL
SECURITY
TAX
WITHHELD
7,691.00
10,900.00
3,064.00
2,325.00
2,463.00
TOTAL
EARNINGS
113,691.00
156,365.00
39,943.00
26,959.00
9,313.00
ENDING
CUMULATIVE
EARNINGS
0.00
0.00
0.00
0.00
150.00
UNEMPLOYMENT
800.00
0.00
3,064.00
2,325.00
2,463.00
SOCIAL SECURITY
TAXABLE EARNINGS
$13.05
13.34
16.10
14.86
13.41
$70.76
MEDICARE
TAX
WITHHELD
7,691.00
10,900.00
3,064.00
2,325.00
2,463.00
MEDICARE
$ 25.00
25.00
25.00
25.00
25.00
$125.00
UNION
DUES
WITHHELD
$ 35.00
35.00
40.00
40.00
35.00
$185.00
UNITED
WAY
WITHHELD
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
106,000.00
145,465.00
36,879.00
24,634.00
6,850.00
BEGINNING
CUMULATIVE
EARNINGS
Total Earnings should be $7,944, not $7,494.
Ending Cumulative Earnings should be $253,698, not $253,248.
Social Security tax withheld should be $492.53, not $429.53.
Total deductions should be $2,041.72, not $2,083.00.
Net Amount should be $5,902.28, not $5,456.00.
Wages Expense should be $7,944, not $7,494.
1
2
3
0
2
ALLOWANCES
TOTAL
EARNINGS
Employee Earnings and Deductions
Exercise 7-3
CHAPTER 7
$ 700.15
725.62
878.08
781.59
730.24
$3,815.68
NET PAY
CHAPTER 7
Employee Earnings and Deductions
Exercise 7-6
GENERAL JOURNAL
DATE
1
2
3
4
5
6
7
8
9
10
20-Jan.
POST.
REF.
DESCRIPTION
PAGE
DEBIT
CREDIT
1
21 Sales Salary Expense
Driver Salary Expense
Office Salary Expense
Employees' Federal Income Tax
Payable
FICA Taxes Payable ($2,127.96 + $497.67)
Employees' Union Dues Payable
Salaries Payable
From payroll register.
14,960.00
10,692.00
8,670.00
2
3
4
5
3,975.00
2,625.63
560.00
27,161.37
6
7
8
9
10
11
11
12
12
Exercise 7-7
Regular earnings
Overtime earnings
Total earnings
Federal income tax withheld
State income tax withheld
Social Security tax withheld
Medicare tax withheld
Charity withheld
Total deductions
Net pay
BROWN
RINGNESS
TOTAL
$ 3,500.00
146.00
$ 3,646.00
$ 268.07
53.61
226.05
52.87
35.00
$ 635.60
$3,010.40
$2,618.00
120.00
$2,738.00
$ 131.87
26.37
169.76
39.70
97.00
$ 464.70
$ 2,273.30
$6,118.00
266.00
$6,384.00
$ 399.94
79.98
395.81
92.57
132.00
$1,100.30
$5,283.70
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
295
CHAPTER 7
Employee Earnings and Deductions
Exercise 7-8
GENERAL JOURNAL
DATE
1
2
20-Sept.
3
4
5
6
7
8
9
10
11
12
DESCRIPTION
PAGE
POST.
REF.
DEBIT
CREDIT
1
30 Salary Expense
Employees' Federal Income Tax
Payable
Employees' State Income Tax
Payable
FICA Taxes Payable ($395.81 + $92.57)
Charity Payable
Cash--Brown
Cash--Ringness
Issued checks 981 and 982
for the month of September.
6,384.00
2
3
399.94
4
5
79.98
488.38
132.00
3,010.40
2,273.30
6
7
8
9
10
11
12
13
13
14
14
296
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
×
$1,200.00
×
$180.00
$45.00 per hour
4 hours
OVERTIME PAY
Gross pay
Overtime pay
Regular pay
GROSS PAY
$1,380.00
180.00
$1,200.00
85.56
20.01
30.00
32.00
Social Security tax
Medicare tax
Union dues
Employee loan
Net pay
Total deductions
$133.00
Federal income tax
Less:
Gross pay
NET PAY
297
$1,079.43
300.57
$1,380.00
Employee Earnings and Deductions
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
$30.00 per hour
40 hours
REGULAR PAY
Problem 7-1A
CHAPTER 7
298
40
40
40
16
40
48
Bills, D.
Carney, W.
Dorn, J.
Edgar, L.
Fitzwilson, G.
TOTAL
HOURS
Arthur, P.
NAME
4,690.00
19,530.00
276.00
276.00
0.00
0.00
0.00
0.00
0.00
OVERTIME
EARNINGS
HIGHRIDGE HOMES
4,966.00
1,196.00
600.00
352.00
518.00
500.00
1,800.00
TOTAL
24,496.00
5,346.00
3,287.00
1,100.00
2,603.00
2,560.00
9,600.00
ENDING
CUMULATIVE
EARNINGS
3,166.00
1,196.00
600.00
352.00
518.00
500.00
0.00
UNEMPLOYMENT
4,966.00
1,196.00
600.00
352.00
518.00
500.00
1,800.00
SOCIAL
SECURITY
4,966.00
1,196.00
600.00
352.00
518.00
500.00
1,800.00
MEDICARE
February 21, 20--
TAXABLE EARNINGS
PAYROLL REGISTER FOR WEEK ENDED
401.15
115.00
26.00
0.00
14.00
13.00
233.15
FEDERAL
INCOME
TAX
307.89
74.15
37.20
21.82
32.12
31.00
111.60
72.00
17.34
8.70
5.10
7.51
7.25
26.10
MEDICARE
TAX
DEDUCTIONS
SOCIAL
SECURITY
TAX
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
920.00
600.00
352.00
518.00
500.00
1,800.00
REGULAR
4,150.00
2,687.00
748.00
2,085.00
2,060.00
7,800.00
BEGINNING
CUMULATIVE
EARNINGS
Employee Earnings and Deductions
Problem 7-2A
CHAPTER 7
781.04
206.49
71.90
26.92
53.63
51.25
370.85
TOTAL
4,184.96
989.51
528.10
325.08
464.37
448.75
1,429.15
NET
AMOUNT
CK.
NO.
2085
2084
2083
2082
2081
2080
PAYMENTS
CHAPTER 7
Employee Earnings and Deductions
Problem 7-2A (concluded)
GENERAL JOURNAL
DATE
1
2
3
4
5
6
7
8
20-Feb.
DESCRIPTION
PAGE
POST.
REF.
DEBIT
CREDIT
1
21 Wages Expense
Employees' Federal Income Tax
Payable
FICA Taxes Payable ($307.89 + $72.00)
Wages Payable
Payroll register for week ended
February 21.
4,966.00
2
3
401.15
379.89
4,184.96
11
12
13
5
6
7
8
9
10
4
9
21 Wages Payable
Cash--Payroll Bank Account
Paid wages for week ended
February 21.
4,184.96
10
4,184.96
11
12
13
14
14
15
15
16
16
17
17
18
18
19
19
20
20
21
21
22
22
23
23
24
24
25
25
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
299
44
40
45
40
44
43
Drew, W.
Garen, S.
North, O.
Ovid, N.
Ross, J.
Springer, O.
300
42
48
Caris, A.
TOTAL
HOURS
Bardin, J.
NAME
831.24
95.64
123.00
0.00
160.50
0.00
129.00
259.20
63.90
OVERTIME
EARNINGS
ALPINE COMPANY
8,753.24
945.64
943.00
860.00
1,016.50
1,960.00
989.00
1,123.20
915.90
TOTAL
381,095.24
45,120.64
7,373.00
41,010.00
44,891.50
107,860.00
44,834.00
45,463.20
44,542.90
ENDING
CUMULATIVE
EARNINGS
October 14, 20--
570.00
0.00
570.00
0.00
0.00
0.00
0.00
0.00
0.00
UNEMPLOYMENT
7,693.24
945.64
943.00
860.00
1,016.50
900.00
989.00
1,123.20
915.90
SOCIAL
SECURITY
8,753.24
945.64
943.00
860.00
1,016.50
1,960.00
989.00
1,123.20
915.90
MEDICARE
TAXABLE EARNINGS
PAYROLL REGISTER FOR WEEK ENDED
763.06
67.00
77.00
65.00
67.00
238.06
83.00
104.00
62.00
FEDERAL
INCOME
TAX
56.79
476.99
58.63
58.47
53.32
63.02
55.80
61.32
69.64
126.92
13.71
13.67
12.47
14.74
28.42
14.34
16.29
13.28
MEDICARE
TAX
DEDUCTIONS
SOCIAL
SECURITY
TAX
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
850.00
7,922.00
44,175.00
820.00
860.00
856.00
1,960.00
860.00
864.00
852.00
REGULAR
372,342.00
6,430.00
40,150.00
43,875.00
105,900.00
43,845.00
44,340.00
43,627.00
BEGINNING
CUMULATIVE
EARNINGS
Employee Earnings and Deductions
Problem 7-3A
CHAPTER 7
1,366.97
139.34
149.14
130.79
144.76
322.28
158.66
189.93
132.07
TOTAL
3945
CK.
NO.
7,386.27
806.30
793.86
729.21
871.74
1,637.72
830.34
3952
3951
3950
3949
3948
3947
#REF! 3946
783.83
NET
AMOUNT
PAYMENTS
CHAPTER 7
Employee Earnings and Deductions
Problem 7-3A (concluded)
GENERAL JOURNAL
DATE
1
2
3
4
5
6
7
8
20-Oct.
DESCRIPTION
PAGE
POST.
REF.
DEBIT
CREDIT
1
14 Wages Expense
Employees' Federal Income Tax
Payable
FICA Taxes Payable ($476.99 + $126.92)
Wages Payable
Payroll register for week ended
October 14.
8,753.24
2
3
763.06
603.91
7,386.27
11
12
13
5
6
7
8
9
10
4
9
14 Wages Payable
Cash--Payroll Bank Account
Paid wages for week ended
October 14.
7,386.27
10
7,386.27
11
12
13
14
14
15
15
16
16
17
17
18
18
19
19
20
20
21
21
22
22
23
23
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
301
47
Johnson, J.
40
Oscar, T.
Troy, B.
302
41
43
Nord, P.
43
46
Ginny, N.
42
40
Fine, J.
Maya, R.
40
Lund, D.
44
Don, V.
TOTAL
HOURS
Albee, C.
NAME
731,087.00
48,180.00
95,312.00
37,470.00
68,170.00
107,000.00
58,097.00
34,250.00
78,367.00
139,251.00
64,990.00
ENDING
CUMULATIVE
EARNINGS
TITAN COMPANY
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
UNEMPLOYMENT
11,626.00
930.00
1,832.00
720.00
1,310.00
1,900.00
1,117.00
660.00
1,507.00
0.00
1,650.00
SOCIAL
SECURITY
TAXABLE EARNINGS
14,667.00
930.00
1,832.00
720.00
1,310.00
2,100.00
1,117.00
660.00
1,507.00
2,841.00
1,650.00
MEDICARE
1,806.04
76.00
241.15
44.00
133.00
308.15
103.00
35.00
161.72
508.37
195.65
FEDERAL
INCOME
TAX
PAYROLL REGISTER FOR WEEK ENDED
720.80
57.66
113.58
44.64
81.22
117.80
69.25
40.92
93.43
0.00
102.30
SOCIAL
SECURITY
TAX
AR
AR
212.68
13.49 UW
26.56 UW
10.44 UW
19.00
30.45 UW
16.20 UW
9.57 UW
21.85 UW
41.19
360.00
20.00
25.00
20.00
70.00
20.00
25.00
35.00
25.00
95.00
25.00
AMOUNT
23.93 UW
MEDICARE
TAX
DEDUCTIONS
December 22, 20--
3,099.52
167.15
406.29
119.08
303.22
476.40
213.45
120.49
302.00
644.56
346.88
TOTAL
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
930.00
14,667.00
47,250.00
1,832.00
720.00
1,310.00
2,100.00
1,117.00
660.00
1,507.00
2,841.00
1,650.00
TOTAL
EARNINGS
716,420.00
93,480.00
36,750.00
66,860.00
104,900.00
56,980.00
33,590.00
76,860.00
136,410.00
63,340.00
BEGINNING
CUMULATIVE
EARNINGS
Employee Earnings and Deductions
Problem 7-4A
CHAPTER 7
CK.
NO.
11,567.48
762.85 2923
1,425.71 2922
600.92 2921
1,006.78 2920
1,623.60 2919
903.55 2918
539.51 2917
1,205.00 2916
2,196.44 2915
1,303.12 2914
NET
AMOUNT
PAYMENTS
12,890.00
930.00
1,832.00
720.00
1,310.00
2,100.00
1,507.00
2,841.00
1,650.00
SALES
SALARY
1,777.00
1,117.00
660.00
OFFICE
SALARY
EXPENSE ACCOUNT
DEBITED
CHAPTER 7
Employee Earnings and Deductions
Problem 7-4A (concluded)
GENERAL JOURNAL
DATE
1
2
3
4
5
6
7
8
9
10
11
20-Dec.
DESCRIPTION
PAGE
POST.
REF.
DEBIT
CREDIT
1
22 Sales Salary Expense
Office Salary Expense
Employees' Federal Income Tax
Payable
FICA Taxes Payable ($720.80 + $212.68)
Accounts Receivable
Employees' United Way Payable
Salaries Payable
Payroll register for week ended
December 22.
12,890.00
1,777.00
2
3
4
1,806.04
933.48
165.00
195.00
11,567.48
14
15
16
6
7
8
9
10
11
12
13
5
12
22 Salaries Payable
Cash--Payroll Bank Account
Paid wages for week ended
December 22.
11,567.48
13
11,567.48
14
15
16
17
17
18
18
19
19
20
20
21
21
22
22
23
23
24
24
25
25
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
303
304
×
$700.00
×
$210.00
$26.25 per hour
8 hours
Gross pay
Overtime pay
Regular pay
GROSS PAY
$910.00
210.00
$700.00
56.42
13.20
32.00
44.75
Social Security tax
Medicare tax
Union dues
Employee loan
Net pay
Total deductions
$62.00
Federal income tax
Less:
Gross pay
NET PAY
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
$17.50 per hour
40 hours
REGULAR PAY
OVERTIME PAY
Employee Earnings and Deductions
Problem 7-1B
CHAPTER 7
$701.63
208.37
$910.00
40
40
46
40
Lisk, J.
Myre, G.
Segel, T.
Torgel, I.
40
40
Hamn, R.
TOTAL
HOURS
Grant, L.
NAME
Problem 7-2B
4,392.00
44,505.00
161.58
0.00
161.58
0.00
0.00
0.00
0.00
OVERTIME
EARNINGS
4,553.58
748.00
879.58
770.00
712.00
724.00
720.00
TOTAL
49,058.58
8,249.00
7,464.58
10,359.00
7,510.00
7,220.00
8,256.00
ENDING
CUMULATIVE
EARNINGS
1,121.00
0.00
415.00
0.00
202.00
504.00
0.00
UNEMPLOYMENT
4,553.58
748.00
879.58
770.00
712.00
724.00
720.00
SOCIAL
SECURITY
4,553.58
748.00
879.58
770.00
712.00
724.00
720.00
MEDICARE
TAXABLE EARNINGS
April 14, 20--
297.00
47.00
67.00
52.00
43.00
44.00
44.00
FEDERAL
INCOME
TAX
DEDUCTIONS
44.64
282.32
46.38
54.53
47.74
44.14
44.89
10.44
66.03
10.85
12.75
11.17
10.32
10.50
645.35
104.23
134.28
110.91
97.46
99.39
99.08
TOTAL
3,908.23
643.77
745.30
659.09
614.54
624.61
620.92
NET
AMOUNT
CK.
NO.
305
2949
2948
2947
2946
2945
2944
PAYMENTS
Employee Earnings and Deductions
SOCIAL
SECURITY MEDICARE
TAX
TAX
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
748.00
718.00
770.00
712.00
724.00
720.00
REGULAR
7,501.00
6,585.00
9,589.00
6,798.00
6,496.00
7,536.00
BEGINNING
CUMULATIVE
EARNINGS
HARVEST COMPANY
PAYROLL REGISTER FOR WEEK ENDED
CHAPTER 7
CHAPTER 7
Employee Earnings and Deductions
Problem 7-2B (concluded)
GENERAL JOURNAL
DATE
1
2
20-Apr.
3
4
5
6
7
8
DESCRIPTION
POST.
REF.
PAGE
DEBIT
CREDIT
1
14 Wages Expense
Employees' Federal Income Tax
Payable
FICA Taxes Payable ($282.32 + $66.03)
Wages Payable
Payroll register for week
ended April 14.
4,553.58
2
3
297.00
348.35
3,908.23
4
5
6
7
8
9
9
14 Wages Payable
Cash--Payroll Bank Account
Paid wages for week ended
April 14.
10
11
12
13
3,908.23
10
3,908.23
11
12
13
14
14
15
15
16
16
17
17
18
18
19
19
20
20
21
21
22
22
23
23
24
24
25
25
306
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
42
40
42
44
40
41
46
42
Dore, C.
Gayle, A.
Hale, R.
Jilly, B.
Karn, S.
Ober, N.
Wong, J.
TOTAL
HOURS
Bolt, D.
NAME
Problem 7-3B
10,000.00
380,754.00
668.25
60.00
189.00
30.75
0.00
240.00
73.50
0.00
75.00
OVERTIME
EARNINGS
10,668.25
860.00
1,029.00
850.75
1,980.00
1,840.00
1,053.50
1,980.00
1,075.00
TOTAL
391,422.25
28,112.00
7,824.00
30,788.75
37,134.00
107,740.00
33,783.50
138,220.00
7,820.00
ENDING
CUMULATIVE
EARNINGS
460.00
0.00
205.00
0.00
0.00
0.00
0.00
0.00
255.00
UNEMPLOYMENT
7,748.25
860.00
1,029.00
850.75
1,980.00
900.00
1,053.50
0.00
1,075.00
SOCIAL
SECURITY
10,668.25
860.00
1,029.00
850.75
1,980.00
1,840.00
1,053.50
1,980.00
1,075.00
MEDICARE
TAXABLE EARNINGS
1,141.37
55.00
89.00
53.00
295.70
208.06
83.00
260.61
97.00
FEDERAL
INCOME
TAX
480.40
53.32
63.80
52.75
122.76
55.80
65.32
0.00
66.65
SOCIAL
SECURITY
TAX
154.70
12.47
14.92
12.34
28.71
26.68
15.28
28.71
15.59
MEDICARE
TAX
DEDUCTIONS
1,776.47
120.79
167.72
118.09
447.17
290.54
163.60
289.32
179.24
TOTAL
8,891.78
739.21
861.28
732.66
1,532.83
1,549.46
889.90
1,690.68
895.76
NET
AMOUNT
CK.
NO.
307
1870
1869
1868
1867
1866
1865
1864
1863
PAYMENTS
Employee Earnings and Deductions
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
800.00
840.00
820.00
1,980.00
1,600.00
980.00
1,980.00
1,000.00
REGULAR
27,252.00
6,795.00
29,938.00
35,154.00
105,900.00
32,730.00
136,240.00
6,745.00
BEGINNING
CUMULATIVE
EARNINGS
September 21, 20--
WILLIAMS COMPANY
PAYROLL REGISTER FOR WEEK ENDED
CHAPTER 7
CHAPTER 7
Employee Earnings and Deductions
Problem 7-3B (concluded)
GENERAL JOURNAL
DATE
1
2
20-Sept.
3
4
5
6
7
8
DESCRIPTION
PAGE
POST.
REF.
DEBIT
CREDIT
1
21 Wages Expense
Employees' Federal Income Tax
Payable
FICA Taxes Payable ($480.40 + $154.70)
Wages Payable
Payroll register for week
ended September 21.
10,668.25
2
3
1,141.37
635.10
8,891.78
4
5
6
7
8
9
9
21 Wages Payable
Cash--Payroll Bank Account
Paid wages for week ended
September 21.
10
11
12
13
8,891.78
10
8,891.78
11
12
13
14
14
15
15
16
16
17
17
18
18
19
19
20
20
21
21
22
22
23
23
24
24
25
25
308
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
TOTAL
HOURS
40
42
40
40
40
40
40
40
44
42
NAME
Chang, C.
Dugan, T.
Fancher, K.
Gannon, T.
Jones, L.
Lange, M.
Milton, D.
Naylor, B.
Orton, A.
Tiosha, J.
Problem 7-4B
517,356.00
49,185.00
96,118.00
38,219.00
38,994.00
108,300.00
38,539.00
33,905.00
38,405.00
41,111.00
34,580.00
ENDING
CUMULATIVE
EARNINGS
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
UNEMPLOYMENT
11,131.00
1,065.00
1,780.00
720.00
1,310.00
600.00
750.00
660.00
725.00
2,841.00
680.00
SOCIAL
SECURITY
TAXABLE EARNINGS
12,631.00
1,065.00
1,780.00
720.00
1,310.00
2,100.00
750.00
660.00
725.00
2,841.00
680.00
MEDICARE
1,482.67
95.00
228.15
44.00
133.00
308.15
49.00
35.00
44.00
508.37
38.00
FEDERAL
INCOME
TAX
690.12
66.03
110.36
44.64
81.22
37.20
46.50
40.92
44.95
176.14
42.16
SOCIAL
SECURITY
TAX
AR
AR
183.15
15.44 UW
25.81
10.44
19.00 UW
30.45 UW
10.88 UW
9.57
10.51 UW
300.00
25.00
70.00
—
20.00
35.00
25.00
—
25.00
20.00
80.00
AMOUNT
41.19 UW
9.86
MEDICARE
TAX
DEDUCTIONS
201.47
434.32
99.08
253.22
410.80
131.38
85.49
124.46
745.70
170.02
TOTAL
CK.
NO.
9,975.06
863.53 2923
1,345.68 2922
620.92 2921
1,056.78 2920
1,689.20 2919
618.62 2918
574.51 2917
600.54 2916
2,095.30 2915
509.98 2914
NET
AMOUNT
PAYMENTS
9,121.00
1,065.00
1,780.00
720.00
1,310.00
725.00
2,841.00
680.00
SALES
SALARY
309
3,510.00
2,100.00
750.00
660.00
OFFICE
SALARY
EXPENSE ACCOUNT
DEBITED
Employee Earnings and Deductions
2,655.94
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
1,065.00
12,631.00
48,120.00
1,780.00
720.00
1,310.00
2,100.00
750.00
660.00
725.00
2,841.00
680.00
TOTAL
EARNINGS
504,725.00
94,338.00
37,499.00
37,684.00
106,200.00
37,789.00
33,245.00
37,680.00
38,270.00
33,900.00
BEGINNING
CUMULATIVE
EARNINGS
December 29, 20--
BEST SPORTS COMPANY
PAYROLL REGISTER FOR WEEK ENDED
CHAPTER 7
CHAPTER 7
Employee Earnings and Deductions
Problem 7-4B (concluded)
GENERAL JOURNAL
DATE
1
2
20-Dec.
3
4
5
6
7
8
9
10
11
DESCRIPTION
PAGE
POST.
REF.
DEBIT
CREDIT
1
29 Sales Salary Expense
Office Salary Expense
Employees' Federal Income Tax
Payable
FICA Taxes Payable ($690.12 + $183.15)
Accounts Receivable
Employees' United Way Payable
Salaries Payable
Payroll register for week
ended December 29.
9,121.00
3,510.00
29 Salaries Payable
Cash--Payroll Bank Account
Paid wages for week ended
December 29.
9,975.06
2
3
4
1,482.67
873.27
150.00
150.00
9,975.06
5
6
7
8
9
10
11
12
12
13
14
15
16
13
9,975.06
14
15
16
17
17
18
18
19
19
20
20
21
21
22
22
23
23
24
24
25
25
310
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 7
Employee Earnings and Deductions
SOLUTIONS TO ACTIVITIES
CONSIDER AND COMMUNICATE
Suggested Response
It is true that a second bank reconciliation would be necessary if there were a payroll bank
account. There might also be additional service charges, depending on the bank and the
type of checking account. However, the primary advantage of using a second account
dedicated to payroll is that payroll funds are separated from the general checking account
funds. The reconciliation of both accounts is simplified because of the separation of
checking accounts and it limits the number of people who have access to the payroll
records.
A QUESTION OF ETHICS
Suggested Response
This action is neither unethical nor illegal. An employee may claim fewer allowances than
he or she is entitled to claim. Some people choose to have more taxes deducted because
they do not want to owe taxes on April 15 of the next year. However, this practice is not
encouraged unless one is extremely familiar with his or her tax position. Penalties may
occur if there is no legal basis for the number of allowances claimed.
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
311