SOLUTION MANUAL
PAYROLL ACCOUNTING
, TABLE OF CONTENTS
Chapter 1: The Need For Payroll And Personnel Records
Chapter 2: Computing Wages And Salaries
Chapter 3: Social Security Taxes
Chapter 4: Income Tax Withholding
Chapter 5: Unemployment Compensation Taxes
Chapter 6: Analyzing And Journalizing Payroll
Chapter 7: Payroll Project
,Chapter 1
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.
,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 09-40-0006, 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 OnlinePersonnel 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 TheyCan Reliably Handle The
Volume Of Payroll Needs In A Timely And Accurate Manner.
What Is The Difference?
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.
ExamplesOf 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’sPayroll 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.
, 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 BeThe 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.
,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
PAYROLL ACCOUNTING
, TABLE OF CONTENTS
Chapter 1: The Need For Payroll And Personnel Records
Chapter 2: Computing Wages And Salaries
Chapter 3: Social Security Taxes
Chapter 4: Income Tax Withholding
Chapter 5: Unemployment Compensation Taxes
Chapter 6: Analyzing And Journalizing Payroll
Chapter 7: Payroll Project
,Chapter 1
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.
,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 09-40-0006, 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 OnlinePersonnel 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 TheyCan Reliably Handle The
Volume Of Payroll Needs In A Timely And Accurate Manner.
What Is The Difference?
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.
ExamplesOf 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’sPayroll 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.
, 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 BeThe 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.
,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
