ACC402 Lecture Notes - Lecture 5: Unemployment Benefits, Canada Pension Plan

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greenmuskrat329

18 Feb 2021

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What is payroll: more than paying employee salaries and wages, companies are required by law: To have payroll records for each employee. Payroll costs: two types of payroll costs: Employee costs: amounts paid to employees (gross pay) & amounts. Employer costs: amounts paid by employer on behalf of the paid by employees (payroll deductions) employee (employee benefits) Total compensation: the total compensation earned by an employee, consists of: Wages = hours worked x hourly rate of pay, or. Salaries: based on a weekly, biweekly, monthly or annual rate. Gross pay and net pay: the difference between gross pay and the amount actually received (net, mandatory payroll deductions: pay) Personal income tax, canada pension plan (cpp) and employment. Insurance (ei: amounts an employer is required to pay. Required by governments: cpp (matching the employee contribution, ei (1. 4 x the employee contribution) Filing and remitting payroll deductions: payroll records. A separate earnings record is kept for each employee.

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Required:

1. The employerâs payroll costs are calculated by matching theemployeeâs CPP contribution (employee rate 4.95%; maximum $2306.70)and paying 1.4 times the employeeâs EI Premium (employee rate1.83%; maximum $839.97). Record the employerâs payroll costs in thegeneral journal.

2. Why is no CPP or EI deducted from Boyd.

Assume that payroll records of a branch of indigo Books providedthe following information for the weekly pay period ended December18, 2012:

Employee Lucy Bourdon Maura Wells Carl Boyd Maurice Lamont

Hoursworked 45 50 49 40

40- hours weeklyearnings $440 $500 $850 $380

IncomeTax $62.85 $73.25 $184.10 $42.60

Canada PensionPlan $22.53 $30.70 $0.00 $15.48

Employmentinsurance $9.56 $12.58 0 $6.95

UnitedWay $16 $16 $40 $4

Earnings at end of previousweek) $19,130 $28,400 $56,380 $8966

Lucy Bourdon and Maurice Lamont work in the office, and MauraWells and Carl Boyd are sales staff. All employees are paid timeand a half for hours worked in excess of 40 hours per week. Showcomputations.

General Journal
DATE 2012	ACCOUNT TITLES AND EXPLANATIONS	POST. REF.	DEBIT	CREDIT

Req. 4

yellowcamel620

Required:

2. Why is no CPP or EI deducted from Boyd.

Assume that payroll records of a branch of indigo Books providedthe following information for the weekly pay period ended December18, 2012:

Employee Lucy Bourdon Maura Wells Carl Boyd Maurice Lamont

Hoursworked 45 50 49 40

40- hours weeklyearnings $440 $500 $850 $380

IncomeTax $62.85 $73.25 $184.10 $42.60

Canada PensionPlan $22.53 $30.70 $0.00 $15.48

Employmentinsurance $9.56 $12.58 0 $6.95

UnitedWay $16 $16 $40 $4

Earnings at end of previousweek) $19,130 $28,400 $56,380 $8966

General Journal
DATE 2012	ACCOUNT TITLES AND EXPLANATIONS	POST. REF.	DEBIT	CREDIT

Req. 4

bronzeporcupine17

Gridiron Concepts Co. began business on January 2, 2013.Salaries were paid to employees on the last day of each month, andsocial security tax, Medicare tax, and federal income tax werewithheld in the required amounts. An employee who is hired in themiddle of the month receives half the monthly salary for thatmonth. All required payroll tax reports were filed, and the correctamount of payroll taxes was remitted by the company for thecalendar year. Early in 2014, before the Wage and Tax Statements(Form W-2) could be prepared for distribution to employees and forfiling with the Social Security Administration, the employees'earnings records were inadvertently destroyed.

None of the employees resigned or were discharged during theyear, and there were no changes in salary rates. The socialsecurity tax was withheld at the rate of 6.0% and Medicare tax atthe rate of 1.5%. Data on dates of employment, salary rates, andemployees' income taxes withheld, which are summarized as follows,were obtained from personnel records and payroll records:

Employee	Date FirstEmployed	MonthlySalary	Monthly IncomeTax Withheld
Brooks	Jan. 2	$3,700	$548
Croom	Oct. 1	5,400	1,015
Fulmer	Apr. 16	2,800	347
Johnson	Nov. 1	2,100	260
Nutt	Jan. 16	9,700	2,183
Richt	Dec. 1	3,500	536
Spurrier	Feb. 1	8,800	1,901

Required:

1. Calculate the amounts to be reported on eachemployee's Wage and Tax Statement (Form W-2) for 2013. Enteramounts to the nearest cent if required. Enter all amounts aspositive numbers.

Employee	GrossEarnings	Federal IncomeTax Withheld	Social SecurityTax Withheld	Medicare TaxWithheld
Brooks	$	$	$	$
Croom
Fulmer
Johnson
Nutt
Richt
Spurrier
			$	$

2. Calculate the following employer payrolltaxes for the year: (a) social security; (b) Medicare; (c) stateunemployment compensation at 4.8% on the first $8,000 of eachemployee's earnings; (d) federal unemployment compensation at 0.8%on the first $8,000 of each employee's earnings; (e) total.

(a)	$
(b)	$
(c)	$
(d)	$
(e)	$

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ACC402 Lecture Notes - Lecture 5: Unemployment Benefits, Canada Pension Plan

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