Quiz 10: Payroll Computations, Records, and Payment
Find the percentage of accrued salaries and related expenses in total current liabilities: Given information is summarized as under:
State the reasons for the managers to check the amount spent for overtime: • Fair Labor Standards Act of 1938 sets minimum hourly wages and maximum work hours per week. • The federal Wage and Hour Law allows only 40 hours per an hour for an employee to work at the regular rate of pay. • If an employees work overtime, he should be paid the overtime premium which is called time and a half. • Therefore, Managers need to check amount spent on overtime premium as excessive amounts can erode company profits because they will end up paying more overtime premium.
1. Given data is summarized as under: Independent workers: Earning base Social security tax Medicare tax Purpose of Social security tax: • Social security tax is levied both on employee and employer. It provides following benefits to employees: 1. Retirement or pension benefits after attaining the age of 62 2. It provides benefits to dependent family members of retired employee. 3. It provides survivors benefits for the worker's minor dependent children and spouse if the worker dies. • In 2011, social security rate was 6.2% of the first $106,800 of salary or wages earned. Calculate Social Security Tax: Purpose of Medicare tax: • Medicare tax is levied on both employee and employer. • It provides medical care for the employee and employee's spouse after attaining age of 65. • All salaries and wages are subject to Medicare tax. Calculate Medicare tax Net Amount Record in Payroll register: Calculate the net amount: 2. Make the general journal entry to record payroll for the week ending December 31, 2013: 3. Make general journal entry to summarize payment of payroll on December 31, 2013: Analyze the balance of salaries payable account: Balance of Salaries Payable account will be zero after all the payroll entries are posted for the month.