SOLUTIONS MANUAL FOR Payroll Accounting 10th Edition by Landin, Bernard J. Bieg and Bridget Stomberg

SOLUTIONS MANUAL FOR Payroll Accounting 10th Edition by Landin, Bernard J. Bieg and Bridget Stomberg. Which Law? 1. K 2. H 3. B 4. F 5. I 6. J 7. A 8. D 9. G 10. C 11. E 12. L Which Payroll Law? 1. D 2. A 3. F 4. C 5. G 6. J 7. B 8. I 9. E 10. H What’s Ethical? 1. Answers will vary. Some concerns include data privacy and integrity in the software switchover, tax and employee pay integrity on the new software, and employee pay methods. SM 7-2 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC. . 2. Answers will vary. Karsyn could choose to ignore her sorority sister’s request, claiming Confidentiality. She could also discontinue active participation in the sorority. In any case, Karsyn must not consent to her sorority sister’s request for confidential information. Confidential Records As the payroll clerk, your task is to protect the privacy and confidentiality of the information you maintain for the company. If a student group—or any personnel aside from the company’s payroll employees and officers—wishes to review confidential records, you should deny their request. If needed, you should refer the group to your department’s manager to discuss the matter in more depth. The laws that apply to this situation are the Privacy Act of 1974, U.S. Department of Health and Human Services Privacy Act , Common-Law Privacy Act, Computer Fraud and Abuse Act, and potentially HIPAA. Large vs. Small 1. Large companies face issues with multiple departments, employee access to online personnel portals, employee data security, and timekeeping accuracy. 2. For small companies, payroll processing will involve fewer employees than for larger companies. Smaller companies could maintain their payroll needs using company personnel because of the lower volume of transactions. Larger companies need to consider their available trained payroll accountants and other staff to determine if they can reliably handle the volume of payroll needs in a timely and accurate manner. What Is the Difference? SM 7-3 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC. . a. Manual payroll systems involve the use of paper and pencil record-keeping or a spreadsheet program, such as Microsoft Excel. This is most appropriate for very small firms. b. Computerized payroll systems can be used by any company, regardless of size. Examples of computerized systems include QuickBooks, Sage 100, and Microsoft Dynamics 365 GP. These computer packages range in price, depending on the company size and operational scope. c. Outsourced payroll involves the engagement of a third party to manage a company’s payroll data, issue employee compensation, and prepare tax forms. d. Certified payroll pertains to companies with employees who work on federal government contracts. Certified payroll ensures that a company reports payroll expenditures of contractually allocated money. ANSWERS TO END-OF-CHAPTER MATERIALS REVIEW QUESTIONS 1. What is the purpose of a payroll system? a. Provide for internal and external reporting of employee wages and associated taxes, payment of employee compensation, and monitoring of benefits to employees. It also serves as a means of tracking labor costs that managers use for decision-making, budgeting, and planning. 2. What are two differences between large- and small-company payroll practices? a. Small companies would have fewer employees and reporting requirements and would be less likely to be required to have automated payroll systems. SM 7-4 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC. . b. Large companies have more employees and greater departmentalization. This increase in employees leads to a higher level of complexity in payroll accounting, disbursements, and reporting. Larger companies may also provide Intranet portals for employee self-service options. Additionally, larger companies may need additional accuracy checks. 3. What is certified payroll? Which companies must use it? a. Certified payroll is a reporting requirement for companies that work with federal contracts that are subject to Davis-Bacon wages. Only those companies that have these types of employees would be required to complete a certified payroll. 4. Why might it be a good idea to let employees manage their payroll records? What are some of the pitfalls? a. An advantage of allowing individuals to self-manage their payroll records would be the employee would be able to answer some simple questions on their own without having to come to the payroll accountant for answers. If employees have access to their payroll records, there would be the need to allow multiple access points to the confidential information. These open channels would require security settings to ensure the requirements of confidentiality are maintained. 5. What are two ways a payroll system may protect a company in the event of a visit from a government auditor? Answers may vary, but should contain: a. The establishment and maintenance of an accurate payroll system. Timely and accurately reporting wages and withholdings. Adherence to the legal framework of payroll. SM 7-5 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC. . 6. What is payroll outsourcing? When might a company consider outsourcing its payroll? a. Payroll outsourcing is the process of contracting another company for the preparation, reporting, and filing of employee payroll. Companies may consider this option if the company sees a benefit to the company that outweighs the cost of outsourcing. 7. What are three examples of federal laws that are essential to ensure legal, fair hiring practices? Answers should contain three the following: a. American with Disabilities Act b. Age Discrimination in Employment Act c. Fair Labor Standards Act d. Civil Rights Act 8. What are the major types of payroll processing methods? a. Manual b. Computerized c. Outsourced d. Certified 9. What are two laws governing the taxes that employers must withhold from employees? a. 16th Amendment of the U.S. Constitution b. Social Security Insurance Act 10. What are the guidelines for FLSA, in terms of overtime and pay rate? a. Maximum hours that covered individuals can work b. Minimum pay for covered individuals c. Minimum age for workers SM 7-6 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC. . d. Mandatory break times for covered employees 11. Why was the Social Security Act of 1935 created? What were its provisions? a. The Social Security Act of 1935 was designed to create a contribution-driven fund to achieve a level of financial stability for the worker when he or she became too old or infirm to work. 12. How did the Medicare and Medicaid Act of 1965 modify the Social Security Act of 1935? a. It was passed to fund medical services needed by older adults, disabled persons, and low-income individuals. 13. What are two of the advantages of a computerized payroll system over a manual system? a. A computerized payroll system can meet the tax and regulatory requirements efficiently and can typically be set to automatically update for tax law changes. Web portals can streamline overtime reporting and other functions. A recent trend in computerized processing is the issuance of employee paycards. 14. Which Act created the term ―full-time equivalents‖? a. The Affordable Care Act created the term full time equivalents to determine the number of employees that should be offered health care coverage under the act. 15. How has cloud-based payroll processing affected contemporary payroll practices? a. Cloud-based payroll processing allows a company the scale of larger corporations without the additional licensing or responsibilities for updates. Cloud-based services can contain security comparable with on-site accounting software. 16. What are two differences between the completion of the I-9 and E-Verify systems? Answers may vary, but could contain the following: a. I-9 is mandatory while E-Verify is voluntary. SM 7-7 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC. . b. I-9 does not require a Social Security number while E-Verify does. c. I-9 does not require a photo identification (List B) while E-Verify does. d. I-9 must be used to reverify expired employment authority while E-Verify may not be used for this purpose. 17. What was the purpose of the SECURE Act? a. The SECURE Act provided tax incentives for small employers to create automatic retirement plans for their employees. 18. What are two of the challenges that arise from the use of outsourced payroll systems? Answers may vary, but should contain: a. Late penalties b. Loss of credibility c. Flawed payroll d. Security breaches of personnel information 19. What distinguishes a ―living wage‖ from the minimum wage? a. The federal labor standards act depicts the federal minimum wage. While several states may have a rate over this, the living wage would need to exceed the poverty level for the family size and geographic region. 20. How does the Equal Pay Act of 1963 differ from the Lilly Ledbetter Fair Pay Act of 2009? a. While the Equal Pay Act of 1963 mandated that men and women receive equal compensation for comparable work, Lilly Ledbetter Fair Pay Act of 2009 removed the statutory timeframe for filing the allocation of unfair pay practices. 21. What are the differences between ARPA and TCDRA? SM 7-8 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC. . a. American Rescue Plan Act of 2021 (APRA) extended employee retention credits and family/sick leave related to COVID-19 through September 30, 2021. APRA increased the rate to $12,000 and eliminated the 10-day waiting period. Taxpayer Certainty and Disaster Recovery Tax Act of 2020 (TCDRA) also extended the employee retention tax credits and changed the amount per employee. TCDRA extended the date through June 30, 2021 and increased the amount to $14,000. The definition of qualified wages for both over and under 500 employees was also altered. TCDRA also allowed employers to take a refundable credit against their share of the Social Security taxes, up to 70% of the qualified wages paid to employees between December 31, 2020 and June 30, 2021. 22. What did ARPA and TCDRA do to the CARES Act? a. Both the ARPA and TCDRA extended benefits of the CARES Act and made alterations to the amount of employee retention credits. EXERCISES – SET A E1-1A. Lupore Fabrics obtained a contract in Watts Mills, South Carolina, which involves the production of materials for military uniforms, a project contracted with the federal government for $2,800,000. What laws govern the wages Lupore Fabrics pays to its workers for this project? (Select all that apply.) 1. Davis-Bacon Act 3. Walsh-Healey Act 4. FLSA – Fair Labor Standards Act SM 7-9 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC. . E1-2A. Dylan Piccirillo works as the payroll clerk for Centinix, a security company that hires many part-time and temporary workers paid hourly. What law(s) govern(s) the hiring or documenting of these workers? (Select all that apply.) 2. FLSA 3. IRCA E1-3A. London Franco was dismissed from employment at Precision Dynamics because of a race-related incident. Enzo sued Precision Dynamics for $150,000 because of the discrimination. Which of the following laws provides for monetary awards during discrimination lawsuits? 4. Civil Rights Act of 1991 E1-4A. Ines, Inc. is a qualified private-sector company that provides health insurance to its employees. The company is self-insured. Which of the following forms should the company provide its employees to comply with the Affordable Care Act? 2. 1095-B E1-5A. Addison Roy is a payroll accountant who works for a private firm. The most recent professional development course in 2010. Which of the following ethical issues has been violated? 3. Professional competence and due care E1-6A. Max Anson owns Uninix Computers, a company with five employees. As a small business owner, there are several options for payroll processing. What factors should be considered when deciding on which payroll processing option is best for Uninix Computers? (Select all that apply.) 3. The amount of money he has to spend on payroll processing. SM 7-10 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC. . 4. The computer technology used by the business MATCH THE FOLLOWING TERMS WITH THEIR DEFINITIONS: Question Answer E1-7A: Manual payroll h. Payroll administration using a paper payroll register E1-8A: Timecard e. A record of the time worked during a period for an individual employee E1-9A: Paycard a. A pre-loaded credit card is used to pay employees E1-10A: Employee Internet portal c. A web-based application wherein employees can modify certain payroll-related information E1-11A: Certified Payroll k. A way for governmental agencies to track the payroll associated with a government contract E1-12A: Outsourced payroll i. The use of an external company to track time and benefits and pay employees E1-13A: Auditor j. A person or group who examines a company’s accounting records for accuracy E1-14A: ADP and Paychex® f. Examples of companies used for outsourcing payroll processing E1-15A: Time collection The process of gathering information about EMAIL ME: For help with report, Assignment, Essay and thesis writing. SM 7-11 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC. . Question Answer hours worked for one or more employees E1-16A: Davis-Bacon Act d. Governs accounting for firms with federal government contracts in excess of $2,000 E1-17A: Consolidated Appropriations Act g. Provided funding for the E-Verify program SM 7-12 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC. . PROBLEM SET A P1-1A: Ash Accardi is the accounting manager for a small, local firm with full- and part-time staff. How do FLSA guidelines regarding working hours apply to Ash’s employees? a. Minimum wage considerations for both salaried and hourly workers, whether the company is required to abide by the FLSA (no interstate commerce), maximum hours, minimum age, pay rates, and mandatory break periods. P1-2A: Micah Sherman works in the payroll department at Radiance Windows. The employer has determined that the payroll functions should be moved to a cloud-based platform that can support its 500 employees, be used remotely, and have requested recommendations. What options could Micah propose? a. When examining online services, employee security and confidentiality is important. There are online options with mobile access that can enable employees to submit time, check pay histories, make updates to address or personal contact information. It is important that there are layers of security in place. This could include SSL, VPN, and CAPTCHA tools. P1-3A: Eden Motta is the office manager and payroll clerk for his company, composed of 12 employees. An employee, Xai Gladwin, stops by Eden's office and wants to view their payroll record. What privacy regulations must Eden consider before granting his coworker access? a. The Privacy Act of 1974 allows an employee access to their payroll records. P1-4A: A group of employees, who read on a website that income tax collection is illegal, approach Jules Furst, the controller for a large company. They requested stopping withholding SM 7-13 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC. . income taxes from their pay without an explanation of what laws govern income tax collection. What should Jules tell them? a. The 16th Amendment to the U.S. Constitution created the legislation to support the collection of taxes from the employees. Additional Social Security Insurance Act was created to provide funding through tax withholdings. P1-5A: Callen Germain is a warehouse worker for a small grocery market. While moving some merchandise, the loading dock door unexpectedly fell and injured Callen. How does OSHA apply to Callen for this type of injury? a. In this type of situation, there would be an OSHA inspection to ensure that the working environment was not the cause of the injury. Workers’ compensation insurance will provide for the coverage of wage compensation for the employee and covered medical expenses should the company’s work environment, and not employee error, be found at fault. Another legal provision is that Callen may be protected under FMLA and may have to take unpaid leave if there is no accrued leave available, but the employment and medical benefits would be guaranteed. P1-6A: Quinn Magnus is a payroll accountant for Mama Bear Trading Co. A coworker from the packaging department contacts Quinn via electronic communication and requests to see all employees’ payroll records for a specific payroll date. How should Quinn respond? a. Ethically, Quinn should not provide the information. The Privacy Act of 1974 would protect the individual’s information from being disclosed. Additionally, an email request should be subject to additional scrutiny as the sender may be false. SM 7-14 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC. . P1-7A: Parker Alberighi and Val van Peij are friends who work for the same company. Parker manages a manufacturing department and Val supervises the payroll clerks. Which ethical guidelines or rules would these friends need to remember when discussing work? a. Both employees would have the responsibility for non-disclosure of confidential information they have over the employees in their areas of responsibility. Exercising personal integrity to avoid any apparent conflicts of interest would also be appropriate for these individuals. P1-8A: At Denniston Industries, employees have the option of choosing employer-sponsored health insurance. According to COBRA, what responsibilities does the employer have upon the termination of an employee? a. The company must offer terminated employees COBRA coverage upon termination. The employee would be required to pay the health insurance premiums. P1-9A: Xan Preston is a new manager at Resterra Inc. Xan is looking at using the E-Verify process for new hires. What recommendations can you give regarding the differences between having an employee complete the I-9 and the E-Verify process? a. The E-Verify process allows employers to utilize the Internet to verify if the employees are eligible to work in the United States. This does not eliminate the need for employees to complete the I-9 since the E-Verify is a voluntary process and could require additional documentation from the employee.