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Written Exercise

Module 05 Written Exercise

For this exercise, use chapter 08 of the textbook to answer the following questions:

Instructor Feedback

What is the difference between an employee and a contractor?

1. Payroll system is used in the case of employees and accounts payable system is used to pay the contractors. 2. Employer is responsible for withholding taxes and making matching contributions and in the case of contractor, he is himself liable to remit the payroll taxes.

What could be the consequence of incorrectly difining an employee as a contractor?

The company becomes liable not only for matching contributions it has to make but also for the amounts not withheld from the employees pay.

What form is an employee required to complete when hired and what is the purpose of this form?

An employee is required to submit form W-4 when hired and this form helps an employer in the determination of number of allowances that an employee is eligible for deduction.

Why are publications 15 and 15A significant to the employer?

These publications facilitate correct calculation of taxes due by providing wage bracket tax tables.

Payroll Problems

Module 05 Payroll Problems
Problem 5.1
Use the wage-bracket method to determine the federal income taxes to withhold from the wages and salaries of each employee.								Instructor Feedback
Use the wage brackets found in the Publication 15 PDF file provided with the assignment file.
		With-
	Marital	holding		Amount
Employee	Status	Allow.	Wages	Withheld
No. 1	Married	3	$850 weekly	$51
No. 2	Single	2	$1,500 biweekly	$149
No. 3	Single	5	$1,800 semimonthly	$113		-5
No. 4	Married	7	$2,500 semimonthly	$109
No. 5	Married	4	4,500 monthly	$291
Problem 5.2
Use the percentage method to determine the federal income taxes to withhold from the wages and salaries of each employee.								Instructor Feedback
Use the Publication 15 PDF file provided with the assignment file.
		With-
	Marital	holding		Amount
Employee	Status	Allow.	Wages	Withheld
No. 1	Married	3	$850 weekly	$50.40	$76.90	$230.70	$619.30	$35.50	$99.30	$14.90	$50.40
No. 2	Single	2	$1,500 biweekly	$147.91	$153.80	$307.60	$1,192.40	$35.50	$749.40	$112.41	$147.91
No. 3	Single	5	$1,800 semimonthly	$111.38	$166.70	$833.50	$966.50	$38.40	$486.50	$72.98	$111.38	-5
No. 4	Married	7	$2,500 semimonthly	$107.82	$166.70	$1,166.90	$1,333.10	$76.90	$206.10	$30.92	$107.82
No. 5	Married	4	4,500 monthly	$290.62	$333.30	$1,333.20	$3,166.80	$153.70	$912.80	$136.92	$290.62
Problem 5.3
Use the wage-bracket method to determine the federal income taxes to withhold from the wages and salaries of each employee.								Instructor Feedback
Use the wage brackets found in the Publication 15 PDF file provided with the assignment file.
		With-
	Marital	holding		Amount
Employee	Status	Allow.	Wages	Withheld
No. 1	Single	2	$775 weekly	$78
No. 2	Married	1	$2,800 biweekly	$313
No. 3	Single	0	$2,020 biweekly	$324		-4
No. 4	Single	5	$2,080 semimonthly	$155
No. 5	Married	8	$3,400 monthly	$4
Problem 5.4
Use the percentage method to determine the federal income taxes to withhold from the wages and salaries of each employee.								Instructor Feedback
Use the Publication 15 PDF file provided with the assignment file.
		With-
	Marital	holding		Amount
Employee	Status	Allow.	Wages	Withheld
No. 1	Single	2	$775 weekly	$77.68	$77	$154	$621	$18	$399	$60	$78	-5
No. 2	Married	1	$2,800 biweekly	$311.83	$154	$154	$2,646	$71	$1,606	$241	$312
No. 3	Single	0	$2,020 biweekly	$321.15	$154	$0	$2,020	$198	$491	$123	$321
No. 4	Single	5	$2,080 semimonthly	$153.38	$167	$834	$1,247	$38	$767	$115	$153
No. 5	Married	8	$3,400 monthly	$1.66	$333	$2,666	$734	$0	$17	$2	$2
							Your numbers are all close - were you using the publication provided in the course?

Continuing Problem Instructions

Continuing Problem Instructions
	Refer to the partially completed payroll register you worked on last week. 1. In the appropriate columns of your payroll register, record the marital status and number of withholding allowances claimed for each employee, using the information provided. 2. Record the amount of federal income taxes using the wage-bracket method. Recall that the 401K and the health plan are both pre-tax deductions. The tax deferral on these deductions applies only to the federal income tax. Use the wage-bracket method to determine the federal income taxes to withhold from the wages and salaries of each employee. Use the wage brackets found in the Publication 15 PDF file provided with the assignment file.
		Marital	Allow-
No.	Employee	Status	ances
300	Adams, Nikki	S	1
111	Barr, Stephanie	S	0
208	Duginski, Samuel	M	2
198	Glander, Morgan	M	4
189	Hines, Terrance	S	2
68	Jama, Adamo	M	3
45	Lee, Min	M	6
17	Rorberts, Tammi	S	1
12	Vick, Tomika	M	5
9	Yo, Margaret	M	7

Continuing Problem Worksheet

Continuing Problem Worksheen
North Country Hotel and Resort
Payroll Register
For the Period Ending: Jan. 07, 20XX
No.	Employee	Marital Status	Allow.	Regular Earnings			Overtime Earnings				Deductions									Net Pay		Taxable Earnings							OASDI	HI	FIT	SIT	SUTA	CIT	SIMPLE	GROUP	HEALTH	Net
				Hours	Hourly Rate	Earnings	Hours	Hourly Rate	Earnings	Total Earnings	Group Life	Health Plan	401K / Simple	FICA		FIT	SIT	CIT	SUTA	Check No.	Amount	OASDI	HI	FUTA	SUTA				0.062	0.0145		0.0307	0.0007	0.03		INS	INS	pay	oasdi	hi	futa	suta
														OASDI	HI
300	Adams, Nikki	S	1	40	$ 12.50	$ 500.00	0	$ 18.75	$ - 0	$ 500.00	$ 5.00	$ 50.00	$ 20.00	$ 27.00	$ 3.25	$49.00				21313		$ 500.00	$ 500.00			300		300	18.60 Mark Sears: Enter as a formula of taxable earnings x OASDI rate	4.35 Mark Sears: Enter as a formula of taxable earnings x HI rate	17.00	9.21	0.21	9.00	20.00	0.85	1.65	219.13	300.00	300.00	300.00	300.00
111	Barr, Stephanie	S	0	40	$ 13.00	$ 520.00	8	$ 19.50	$ 156.00	$ 676.00	$ 5.00	$ 50.00	$ 50.00	$ 36.50	$ 4.39	$86.00				21314		$ 676.00	$ 676.00			290	87.04	377.04	23.38	5.47	34.00	11.58	0.26	11.31	50.00	0.85	1.65	238.55	377.04	377.04	377.04	377.04
208	Duginski, Samuel	M	2	39.5	$ 16.75	$ 661.63	0	$ 25.13	$ - 0	$ 661.63	$ 5.00	$ 100.00	$ 40.00	$ 35.73	$ 4.30	$35.00				21315		$ 661.63	$ 661.63			303.75		303.75	18.83	4.40	- 0	9.33	0.21	9.11	40.00	0.85	1.65	219.36	303.75	303.75	303.75	303.75
198	Glander, Morgan	M	4	40	$ 14.00	$ 560.00	6	$ 21.00	$ 126.00	$ 686.00	$ 5.00	$ 100.00	$ 50.00	$ 37.04	$ 4.46	$21.00				21316		$ 686.00	$ 686.00			316	71.1	387.1	24.00	5.61	- 0	11.88	0.27	11.61	50.00	0.85	1.65	281.22	387.10	387.10	387.10	387.10
189	Hines, Terrance	S	2	40	$ 18.25	$ 730.00	0	$ 27.38	$ - 0	$ 730.00	$ 5.00	$ 50.00	$ 20.00	$ 39.42	$ 4.75	$72.00				21317		$ 730.00	$ 730.00			390		390	24.18	5.66	19.00	11.97	0.27	11.70	20.00	- 0	1.65	295.57	390.00	390.00	390.00	390.00
68	Jama, Adamo	M	3	40	$ 26.25	$ 1,050.00	1.75	$ 39.38	$ 68.91	$ 1,118.91	$ 10.00	$ 100.00	$ 40.00	$ 60.42	$ 7.27	$90.00				21318		$ 1,118.91	$ 1,118.91			515	24.15	539.15	33.43	7.82	11.00	16.55	0.38	16.17	40.00	0.85	1.65	411.30	539.15	539.15	539.15	539.15
45	Lee, Min	M	6	40	$ 27.55	$ 1,102.00	4	$ 41.33	$ 165.30	$ 1,267.30	$ 10.00	$ 100.00	$ 50.00	$ 68.43	$ 8.24	$78.00				21319		$ 1,267.30	$ 1,267.30			392.31		392.31	24.32	5.69	- 0	12.04	0.27	11.77	50.00	0.85	1.65	285.71	392.31	392.31	392.31	392.31
17	Rorberts, Tammi	S	1	40	$ 36.63	$ 1,465.20				$ 1,465.20	$ 10.00	$ 50.00	$ 60.00	$ 79.12	$ 9.52	$255.18				21320		$ 1,465.20	$ 1,465.20			542.31		542.31	33.62	7.86	47.00	16.65	0.38	16.27	60.00	- 0	1.65	358.88	542.31	542.31	542.31	542.31
12	Vick, Tomika	M	5	40	$ 49.10	$ 1,964.00	1	$ 73.65	$ 73.65	$ 2,037.65	$ 10.00	$ 100.00	$ 30.00	$ 110.03	$ 13.24	$210.19				21321		$ 2,037.65	$ 2,037.65			348.46	52.28	400.74	24.85	5.81	- 0	12.30	0.28	12.02	30.00	0.85	1.65	312.98	400.74	400.74	400.74	400.74
9	Yo, Margaret	M	7	40	$ 60.10	$ 2,404.00				$ 2,404.00	$ 15.00	$ 100.00	$ 80.00	$ 129.82	$ 15.63	$263.33				21322		$ 2,404.00	$ 2,404.00			1000		1000	62.00	14.50	24.00	30.70	0.70	30.00	80.00	0.85	1.65	755.60	1,000.00	1,000.00	1,000.00	1,000.00
	Totals					$ 10,956.83			$ 589.86	$ 11,546.68	$ 80.00	$ 800.00	$ 440.00	$ 623.52	$ 75.05	$1,159.69						$ 11,546.68	$ 11,546.68			4,397.83 Mark Sears: Enter as formula totaling column	234.57 Mark Sears: Enter as formula totaling column	4,632.40 Mark Sears: Enter as formula totaling column	287.21 Mark Sears: Enter as formula totaling column	67.17 Mark Sears: Enter as formula totaling column	152.00 Mark Sears: Enter as formula totaling column	142.21 Mark Sears: Enter as formula totaling column	3.24 Mark Sears: Enter as formula totaling column	138.97 Mark Sears: Enter as formula totaling column	440.00 Mark Sears: Enter as formula totaling column	6.80 Mark Sears: Enter as formula totaling column	16.50 Mark Sears: Enter as formula totaling column	3,378.29 Mark Sears: Enter as formula totaling column	4,632.40 Mark Sears: Enter as formula totaling column	4,632.40 Mark Sears: Enter as formula totaling column	4,632.40 Mark Sears: Enter as formula totaling column	4,632.40 Mark Sears: Enter as formula totaling column
																													Mark Sears: Enter as a formula of taxable earnings x OASDI rate	Mark Sears: Enter as a formula of taxable earnings x HI rate	Mark Sears: Enter as formula totaling column	Mark Sears: Enter as formula totaling column		Mark Sears: Enter as formula totaling column	Mark Sears: Enter as formula totaling column	Mark Sears: Enter as formula totaling column	Mark Sears: Enter as formula totaling column	Mark Sears: Enter as formula totaling column	76.9	1	76.9	1388.3	99.1	624.3	156.075	255.175
		Journal									76.9	5	384.5	1653.15	198.4	47.15	11.7875	210.1875
											76.9	7	538.3	1865.7	198.4	259.7	64.925	263.325
		Date		Account					Debit	Credit						Taxable		OASDI
																Earnings	Rate	Tax
		01/07/20XX		Salaries and Wages Expense									-3.6		OASDI	$ 11,546.68	0.054	$ 623.52									4,632.40
				Employee FIT Payable									FIT															287.21
				Employee SIT Payable														HI Tax										67.17					Taxable
				Empoyee SUTA Payable											HI	$ 11,546.68	0.0065	$ 75.05										152.00					Earnings	Rate	Net FUTA
				Employee CIT Payabale									$ 39.00															142.21					4,632.40	0.006	27.79
				FICA - OASDI Payable									$ 71.00															3.24							SUTA
				FICA - HI Payable									$ 21.00					FUTA Tax										138.97					4,632.40	0.036785	170.40
				401K Contributions Payable									$ 7.00		FUTA													440.00
				Group Insurance Premiums Payable									$ 62.00															6.80
				Health Insurance Premiums Payable									$ 70.00					SUTA Tax										16.50
				Salaries and Wages Payable									$ 57.00		SUTA													3,378.29
													$ 229.30
		01/07/20XX		Payroll Taxes Expense									$ 187.25														552.58
				FICA - OASDI Payable									$ 222.86															287.21
				FICA - HI Payabale									$ 966.41															67.17
				FUTA Taxes Payable																								27.79
				SUTA Taxes Payable																								170.40
		01/14/20XX		Salaries and Wages Payable																							3,378.29
				Cash																								3,378.29