SOLUTION MANUAL
Payroll Accounting 2024, 34th Edition
by Bernard J. Bieg, Bridget Stomberg, Chapters 1 - 7
, 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 youii 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 matterin more depth. The
laws that apply to this situation are the Privacy Act of 1974, U.S. Departmentof
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 smallfirms.
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’siipayroll data, issue employee compensation, and prepare
tax forms.
d. Certified payroll pertains to companies with employees who work on
federal governmentiicontracts. Certified payroll ensures that a company
reports payroll expenditures of contractually allocated money.
,ANSWERS AT THE END-OF-CHAPTER
MATERIALSiiREVIEW QUESTIONS
1. Whatq isq theq purpose q ofq a q payroll q system?
a. Provide q for q internalq and q external q reportingq of q employee q wages q and qasso
ciated q taxes, q paymentq of q employee q compensation, q and q monitoringq of qben
efits q toq employees. q It q alsoii serves q asq a q meansq of q tracking q laborq costs qthat
q managers q use q for q decision-making, q budgeting,q and q planning.
2. Whatq areq twoq differencesq betweenq large-q andq small-companyq payrollq practices?
a. Smallq companies q would q have q fewer q employees q and q reporting
requirementsq andq wouldbeq lessq likelyq toq beq requiredq toq haveq automatedqp
ayrollq systems.
b. Large q companies q haveq more q employees q and q greater q departmentalization.
Thisq increaseq inq employees q leads q toq aq higher q level q ofq complexityq in qpayr
ollq accounting,q disbursements, q and q reporting.q Larger q companies q may qalso
q provideq Intranetq portalsq foremployeeq self-service q options.
Additionally, q larger q companies q may q need q additional q accuracy q checks.
3. What q isq certified q payroll?q Which q companies q must q useq it?
a. Certifiedq payrollq isq aq reportingq requirementq forq companiesq thatq workqwit
hq federalqcontractsq thatq areq subjectq toq Davis-
Baconq wages.q Onlyqthoseq companiesq thatq haveqtheseq typesq of q employe
esq wouldq beqrequiredq toq completeq aq certifiedq payroll.
4. Why q mightq it q beq a q good q idea q to q letq employees q manage q their q payroll q records?
Whatq areq someiiofq theq pitfalls?
a. An q advantage q of q allowing q individualsq to q self-
, manage q their q payrollqrecordsq would q bethe q employeeq would q be q ableq to
q answer q some q simpleqquestions q on q their q ownq without q having q to q come
q toq the q payrollqaccountant q forq answers.q If q employeesq haveq access q to q t
heirq payroll qrecords, q there q would q beq the q need q to q allowq multiple q acces
sq points q to qthe q confidential q information. q These q openq channelsq would q
require qsecurityq settings q toq ensureq the q requirementsq of q confidentiality
q areqmaintained.
5. Whatq are q two q ways q aq payroll q systemq may q protect q a q company q in q the q event
qofq a q visitq fromq agovernment q auditor?
Answersq may q vary, q but q should q contain:
a. The q establishmentq and q maintenance q of q an q accurate q payrollq system.
Timelyq and q accurately q reportingq wagesq and q withholdings.q Adherence
qtoq the q legalq framework q ofpayroll.
,6. What q isq payroll q outsourcing? q When q might q a q company q considerq outsourcingq its q payroll?
a. Payroll q outsourcingq isq the q process q ofq contracting q another q companyq for q the
qpreparation,reporting, q and q filing q of q employee q payroll. q Companiesq may qco
nsiderq thisq option q if q theq company q sees q a q benefitq to q theq company q that qout
weighs q the q cost q of q outsourcing.
7. Whatq areq threeq examplesq ofq federalq lawsq thatq areq essentialq toq ensureq l
egal,q fairq hiringiipractices?
Answers q should q contain q threeq the q following:
a. American q with q Disabilitiesq Act
b. Age q Discrimination q in q Employmentq Act
c. Fair q Laborq Standards q Act
d. Civil q Rights q Act
8. Whatq areq theq majorq types q ofq payrollq processingq methods?
a. Manual
b. Computerized
c. Outsourced
d. Certified
9. Whatq areq twoq lawsq governingq theq taxesq thatq employersq mustq withholdq fromq employees?
a. 16th q Amendment q of q theq U.S. q Constitution
b. Social q SecurityqInsurance q Act
10. What q are q the q guidelines q for q FLSA,q in q termsq of q overtime q and q pay q rate?
a. Maximum q hours q that q covered q individuals q can q work
,b. Minimum q payq forq covered q individuals
c. Minimum q age q for q workers
, d. Mandatoryq breakq timesq forq coveredq employees
11. Why qwas q the q Socialq Security q Act q ofq 1935 q created? q What q were q itsq provisions?
a. Theq Socialq Securityq Actq ofq 1935q wasq designedq toq createq aq contribution-
drivenq fund q toachieveq aq levelq ofq financialq stabilityq forq theq workerq when
q
heq orq sheq becameq tooq oldq orinfirmq toq work.
q
12. How q did q the q Medicare q and q Medicaid q Act q of q 1965 q modify q the q Social q Security q Actq of q 1935
?
a. Itq was q passed q toq fund q medical q servicesq needed q by q older q adults, qdisabl
ed q persons, q andlow-income q individuals.
13. What q areq two q ofq the q advantagesq of q a q computerized q payrollq systemq over q a q manualqsyste
m?
a. Aq computerized q payroll q system q can q meet q the q tax q and q regulatory qrequire
ments q efficientlyq and q can q typicallyq be q setq to q automatically q update qfor q tax
q law q changes. q Webportals q can q streamlineq overtime q reporting q and qother q
functions.q A q recentq trend q in q computerized q processingq isq theqissuanceq of
q employeeq paycards.
14. Whichq Actq createdq theq termq ―full-timeq equivalents‖?
a. The qAffordable qCare qAct qcreated qthe qterm qfull qtime qequivalents qto qde
termineqthenumber qof qemployeesqthatqshould qbe qoffered qhealth qcare
q coverageq under q theq act.
15. How q hasq cloud-based q payrollq processing q affected q contemporary q payroll q practices?
a. Cloud-
basedq payrollq processingq allowsq aq companyq theq scaleq ofq largerqcorp
orationsq withoutq theq additionalq licensingq orq responsibilitiesq for
Payroll Accounting 2024, 34th Edition
by Bernard J. Bieg, Bridget Stomberg, Chapters 1 - 7
, 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 youii 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 matterin more depth. The
laws that apply to this situation are the Privacy Act of 1974, U.S. Departmentof
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 smallfirms.
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’siipayroll data, issue employee compensation, and prepare
tax forms.
d. Certified payroll pertains to companies with employees who work on
federal governmentiicontracts. Certified payroll ensures that a company
reports payroll expenditures of contractually allocated money.
,ANSWERS AT THE END-OF-CHAPTER
MATERIALSiiREVIEW QUESTIONS
1. Whatq isq theq purpose q ofq a q payroll q system?
a. Provide q for q internalq and q external q reportingq of q employee q wages q and qasso
ciated q taxes, q paymentq of q employee q compensation, q and q monitoringq of qben
efits q toq employees. q It q alsoii serves q asq a q meansq of q tracking q laborq costs qthat
q managers q use q for q decision-making, q budgeting,q and q planning.
2. Whatq areq twoq differencesq betweenq large-q andq small-companyq payrollq practices?
a. Smallq companies q would q have q fewer q employees q and q reporting
requirementsq andq wouldbeq lessq likelyq toq beq requiredq toq haveq automatedqp
ayrollq systems.
b. Large q companies q haveq more q employees q and q greater q departmentalization.
Thisq increaseq inq employees q leads q toq aq higher q level q ofq complexityq in qpayr
ollq accounting,q disbursements, q and q reporting.q Larger q companies q may qalso
q provideq Intranetq portalsq foremployeeq self-service q options.
Additionally, q larger q companies q may q need q additional q accuracy q checks.
3. What q isq certified q payroll?q Which q companies q must q useq it?
a. Certifiedq payrollq isq aq reportingq requirementq forq companiesq thatq workqwit
hq federalqcontractsq thatq areq subjectq toq Davis-
Baconq wages.q Onlyqthoseq companiesq thatq haveqtheseq typesq of q employe
esq wouldq beqrequiredq toq completeq aq certifiedq payroll.
4. Why q mightq it q beq a q good q idea q to q letq employees q manage q their q payroll q records?
Whatq areq someiiofq theq pitfalls?
a. An q advantage q of q allowing q individualsq to q self-
, manage q their q payrollqrecordsq would q bethe q employeeq would q be q ableq to
q answer q some q simpleqquestions q on q their q ownq without q having q to q come
q toq the q payrollqaccountant q forq answers.q If q employeesq haveq access q to q t
heirq payroll qrecords, q there q would q beq the q need q to q allowq multiple q acces
sq points q to qthe q confidential q information. q These q openq channelsq would q
require qsecurityq settings q toq ensureq the q requirementsq of q confidentiality
q areqmaintained.
5. Whatq are q two q ways q aq payroll q systemq may q protect q a q company q in q the q event
qofq a q visitq fromq agovernment q auditor?
Answersq may q vary, q but q should q contain:
a. The q establishmentq and q maintenance q of q an q accurate q payrollq system.
Timelyq and q accurately q reportingq wagesq and q withholdings.q Adherence
qtoq the q legalq framework q ofpayroll.
,6. What q isq payroll q outsourcing? q When q might q a q company q considerq outsourcingq its q payroll?
a. Payroll q outsourcingq isq the q process q ofq contracting q another q companyq for q the
qpreparation,reporting, q and q filing q of q employee q payroll. q Companiesq may qco
nsiderq thisq option q if q theq company q sees q a q benefitq to q theq company q that qout
weighs q the q cost q of q outsourcing.
7. Whatq areq threeq examplesq ofq federalq lawsq thatq areq essentialq toq ensureq l
egal,q fairq hiringiipractices?
Answers q should q contain q threeq the q following:
a. American q with q Disabilitiesq Act
b. Age q Discrimination q in q Employmentq Act
c. Fair q Laborq Standards q Act
d. Civil q Rights q Act
8. Whatq areq theq majorq types q ofq payrollq processingq methods?
a. Manual
b. Computerized
c. Outsourced
d. Certified
9. Whatq areq twoq lawsq governingq theq taxesq thatq employersq mustq withholdq fromq employees?
a. 16th q Amendment q of q theq U.S. q Constitution
b. Social q SecurityqInsurance q Act
10. What q are q the q guidelines q for q FLSA,q in q termsq of q overtime q and q pay q rate?
a. Maximum q hours q that q covered q individuals q can q work
,b. Minimum q payq forq covered q individuals
c. Minimum q age q for q workers
, d. Mandatoryq breakq timesq forq coveredq employees
11. Why qwas q the q Socialq Security q Act q ofq 1935 q created? q What q were q itsq provisions?
a. Theq Socialq Securityq Actq ofq 1935q wasq designedq toq createq aq contribution-
drivenq fund q toachieveq aq levelq ofq financialq stabilityq forq theq workerq when
q
heq orq sheq becameq tooq oldq orinfirmq toq work.
q
12. How q did q the q Medicare q and q Medicaid q Act q of q 1965 q modify q the q Social q Security q Actq of q 1935
?
a. Itq was q passed q toq fund q medical q servicesq needed q by q older q adults, qdisabl
ed q persons, q andlow-income q individuals.
13. What q areq two q ofq the q advantagesq of q a q computerized q payrollq systemq over q a q manualqsyste
m?
a. Aq computerized q payroll q system q can q meet q the q tax q and q regulatory qrequire
ments q efficientlyq and q can q typicallyq be q setq to q automatically q update qfor q tax
q law q changes. q Webportals q can q streamlineq overtime q reporting q and qother q
functions.q A q recentq trend q in q computerized q processingq isq theqissuanceq of
q employeeq paycards.
14. Whichq Actq createdq theq termq ―full-timeq equivalents‖?
a. The qAffordable qCare qAct qcreated qthe qterm qfull qtime qequivalents qto qde
termineqthenumber qof qemployeesqthatqshould qbe qoffered qhealth qcare
q coverageq under q theq act.
15. How q hasq cloud-based q payrollq processing q affected q contemporary q payroll q practices?
a. Cloud-
basedq payrollq processingq allowsq aq companyq theq scaleq ofq largerqcorp
orationsq withoutq theq additionalq licensingq orq responsibilitiesq for
