In the Continuing Payroll Problem B, presented at the end of succeeding chapters, you will gain experience in computing wages and salaries and preparing a payroll register for Olney Company, Inc., a newly formed corporation.
At the end of subsequent chapters, information will be presented so that the payroll register can be completed step by step as you proceed through the discussion material relating to that particular section of the payroll register.
Olney Company is a small manufacturing firm located in Allentown, Pennsylvania. The company has a workforce of both hourly and salaried employees.
Each employee is paid for hours actually worked during each week, with the time worked being recorded in quarter-hour increments. The standard workweek consists of 40 hours, with all employees being paid time and one-half for any hours worked beyond the 40 regular hours.
Wages are paid every Friday, with one week’s pay being held back by the company. Thus, the first payday for Olney Company is January 14 for the workweek ending January 8 (Saturday).
The information below will be used in preparing the payroll for the pay period ending January 8, 20–.
Ms. Carmen V. Ruppert prepares the time clerk’s report for each pay period. Her report for the first week of operations is given on the following page.
Using the payroll register for Olney Company, which is reproduced on a fold-out at the back of the book (PR-1), proceed as follows:
1. Enter each employee’s time card number and name in the appropriate columns.
2. Record the regular hours and the overtime hours worked for each employee, using the time clerk’s report as your reference.
3. Complete the Regular Earnings columns (Rate per Hour and Amount) and the Overtime Earnings columns (Rate per Hour and Amount) for each hourly employee. For salaried workers, complete the Regular Earnings column and show the hourly overtime rate and earnings only if overtime was worked.
4. Record the Total Earnings for each employee by adding the Regular Earnings and the Overtime Earnings.
Check the unemployment compensation law of your state and determine the answers to the following questions:
a. How do nonprofit organizations, subject to coverage, make payments to the unemployment compensation fund?
b. Can part-time teachers collect unemployment compensation between school terms?
c. Can professional athletes receive unemployment compensation?
d. Are aliens covered by the unemployment compensation law?
e. How do employers protest or appeal benefit determinations and charges against their accounts?
f. Briefly describe how a person’s weekly benefit rate and maximum benefit amount are determined.
g. Can an unemployed worker collect additional benefits if he or she has dependents? If so, how much is paid for each dependent?
h. Does the state provide payment of partial benefits?
i. Are benefits payable to a female during pregnancy?
j. Can employers make voluntary contributions to their state unemployment reserve accounts?
k. For what reasons may an unemployed worker be disqualified from receiving unemployment benefits?
l. What steps are taken by the state unemployment agency to prevent the improper payment of claims?
In this last phase of your work on the Continuing Payroll Problem B, you will record the amounts withheld for group and health insurance and calculate the net pay for each employee. Refer to the partially completed payroll registers upon which you were working at the end of Chapter 5, and proceed as follows:
1. In the appropriate column of the payroll register, record the amount to be withheld for group life insurance. Each employee contributes 85¢ each week toward the cost of group insurance coverage, with the exception of Palmetto and Wichman (Olney Company) who are not yet eligible for coverage under the company plan.
2. Record the amount to be withheld for health insurance. Each employee contributes $1.65 each week toward the cost of health insurance.
3. Record the net pay for each employee. The net pay for each employee is obtained by subtracting the total amount of all deductions from the total earnings.
4. Each worker is to be paid by check. Assign check numbers commencing with No. 313.
5. Foot all money columns of the payroll register, and prove the accuracy of the column totals.
6. On a separate sheet of paper:
a. Prepare the journal entries as of January 12 to record the payroll and the payroll taxes for the week ending January 8. Credit Salaries Payable for the total net pay.
Use the following tax rates and bases: employer’s FICA—OASDI, 6.2% on the first $127,200; employer’s FICA—HI, 1.45% on total earnings; FUTA, 0.6% on the first $7,000; and SUTA, 3.6785% on the first $9,750.
b. Prepare the journal entry to record the payment of the payroll on January 14 when the paychecks are distributed to all workers.
Your work on the Continuing Payroll Problem B is now completed, and you may be asked to submit your payroll register to your instructor. The experience you have gained in working on each of the succeeding phases of the Continuing Payroll Problem will aid you in undertaking the payroll work involved in Chapter 7. In the Comprehensive Payroll Project, you will be responsible for all aspects of payroll operations for a company for an entire calendar quarter.