Note: For the exercises and problems in this chapter, use the following tax rates:
FICA-Employer and employee 8% if the first $120,000 of earnings per employee per calender year.
State unemployment: 4% of the first $8,000 of earnings per employee per calender year.
Federal unemployment: 1% of the first $8,000 of earnings per employee per calender year.
Federal income tax witholding: 10% of each employee's gross earnings unless otherwise stated.
E3-1 Computing payroll earnings
R. Herbert of Crestview Manufacturing Co. is paid at the rate of $20 an hour for an eight-hour day, with time and a half for overtime and double time for Sundays and holidays. Regular employment is on the baiss of 40 hours a week, five days a week. At the end of a week, the labor time record shows the following:
Job or Indirect Labor Sunday Monday Tuesday Wednesday Thursday Friday Saturday Total 007 5 5 3 5 6 24 009 3 3 5 6.5 5 22.5 Machine Repair 4 6.5 10.5 Total 4 8 8 8 11.5 11 6.5 57
Because jobs are randomly scheduled for the overtime period, any overtime oremium is charged to Factory Overhead.
a. Compute Herbert's total earnings for the week.
b. Present the journal entry to distribute Herbert's total earnigns.
(Note: These single journal entries here and in E3-2, E3-3, E3-4, E3-8 and E3-9 are for the purpose of illustrating the principle involved. Normally, the entries would be made for the total factory payroll plus the adminstrative sales and payroll.)
E3-9 Recording the payroll and payroll taxes
Using the earnings data developed in e3-1, and assuming that this was the 50th week of employment for Herbert and the prevoius earnigns to date were $119,800, prepare the journal entries for the following:
a. The week's payroll
b. payment of the payroll
c. The employer's payroll taxes
Note: For the exercises and problems in this chapter, use the following tax rates:
FICA-Employer and employee 8% if the first $120,000 of earnings per employee per calender year.
State unemployment: 4% of the first $8,000 of earnings per employee per calender year.
Federal unemployment: 1% of the first $8,000 of earnings per employee per calender year.
Federal income tax witholding: 10% of each employee's gross earnings unless otherwise stated.
E3-1 Computing payroll earnings
R. Herbert of Crestview Manufacturing Co. is paid at the rate of $20 an hour for an eight-hour day, with time and a half for overtime and double time for Sundays and holidays. Regular employment is on the baiss of 40 hours a week, five days a week. At the end of a week, the labor time record shows the following:
| Job or Indirect Labor | Sunday | Monday | Tuesday | Wednesday | Thursday | Friday | Saturday | Total |
| 007 | 5 | 5 | 3 | 5 | 6 | 24 | ||
| 009 | 3 | 3 | 5 | 6.5 | 5 | 22.5 | ||
| Machine Repair | 4 | 6.5 | 10.5 | |||||
| Total | 4 | 8 | 8 | 8 | 11.5 | 11 | 6.5 | 57 |
Because jobs are randomly scheduled for the overtime period, any overtime oremium is charged to Factory Overhead.
a. Compute Herbert's total earnings for the week.
b. Present the journal entry to distribute Herbert's total earnigns.
(Note: These single journal entries here and in E3-2, E3-3, E3-4, E3-8 and E3-9 are for the purpose of illustrating the principle involved. Normally, the entries would be made for the total factory payroll plus the adminstrative sales and payroll.)
E3-9 Recording the payroll and payroll taxes
Using the earnings data developed in e3-1, and assuming that this was the 50th week of employment for Herbert and the prevoius earnigns to date were $119,800, prepare the journal entries for the following:
a. The week's payroll
b. payment of the payroll
c. The employer's payroll taxes
Related questions
Kipley Company is a small manufacturing firm located inPittsburgh, Pennsylvania. The company has a workforce of bothhourly and salaried employees. Each employee is paid for hoursactually worked during each week, with the time worked beingrecorded in quarter-hour increments. The standard workweek consistsof 40 hours, with all employees being paid time and one-half forany hours worked beyond the 40 regular hours.
Wages are paid every Friday, with one week's pay being held backby the company. Assume that the first payday for Kipley Company isJanuary 14 for the workweek ending January 8 (Saturday).
You are being asked to complete Kipley's Payroll Register forthe pay period ending January 8, 20--. Ms. Glenda B. Robey preparesthe Time Clerk's Report for each pay period. This alongwith the Hourly Wage / Salary Report is provided.
Requirement:
Record the regular hours and the overtime hours worked for eachemployee, using the time clerk's report as your reference.
Complete the Regular Earnings columns (Rate per Hour and Amount)for hourly employees. For only hourly employees that workedovertime, complete the Overtime Earnings columns (Rate per Hour andAmount).
For salaried workers, complete the Regular Earnings column and showthe hourly overtime rate and earnings only if overtime wasworked.
Record the Total Earnings for each employee by adding theRegular Earnings and the Overtime Earnings.
Hourly Wage / Salary Report
Kipley's Hourly Wage / Salary Report is provided below, listingeach employee's assigned time card number as well as theirindividual hourly rate or salary.
| Time Card No. | Employee Name | Hourly Wage orSalary | ||
|---|---|---|---|---|
| 11 | Fran M. Carson | $17.50 | per hour | |
| 12 | William A. Wilson | 17.25 | per hour | |
| 13 | Harry T. Utley | 18.10 | per hour | |
| 21 | Lawrence R. Fife | 17.90 | per hour | |
| 22 | Lucy K. Smith | 19.75 | per hour | |
| 31 | Gretchen R. Fay | 515 | per week | |
| 32 | Glenda B. Robey | 2,700 | per month | |
| 33 | Thomas K. Schork | 3,350 | per month | |
| 51 | Barbara T. Hardy | 2,510 | per month | |
| 99 | Carson C. Kipley | 52,000 | per year | |
Time Clerk's Report
Ms. Glenda B. Robey prepares the time clerk's report for eachpay period. Her report for the first week of operations is givenbelow.
Note: All employees, except for Carson Kipley, are paidfor hours worked beyond 40 at one and one-half times their regularhourly rate of pay.
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Payroll Register
This is the first task to completing Kipley Company's payrollregister. Complete the steps outlined below:
Record the regular hours and the overtime hours worked for eachemployee, using the time clerk's report as your reference.
Complete the Regular Earnings columns (Rate per Hour and Amount)for hourly employees. For only hourly employees that workedovertime, complete the Overtime Earnings columns (Rate per Hour andAmount).
For salaried workers, complete the Regular Earnings column and showthe hourly overtime rate and earnings only if overtime wasworked.
Record the Total Earnings for each employee by adding theRegular Earnings and the Overtime Earnings.
If an amount box does not require an entry, leave it blank orenter "0". If required, round your intermediate calculations to thenearest cent and use the rounded amounts in subsequentcomputations. Round fraction values to the nearest two decimalplaces, e.g. 1 1/2 to 1.50.
| KIPLEY COMPANY, INC. Employee Payroll Register For Period Ending January 8, 20 -- | ||||||||||
| Regular Earnings | Overtime Earnings | |||||||||
| Time Card No. | Name | Marital Status | No.W/H Allow. | Hours Worked | Rate per Hour | Amount | Hours Worked | Rate per Hour | Amount | Total Earnings |
|---|---|---|---|---|---|---|---|---|---|---|
| 11 | Carson, F. | S | 1 | $ | $ | $ | $ | $ | ||
| 12 | Wilson, W. | S | 0 | |||||||
| 13 | Utley, H. | M | 2 | |||||||
| 21 | Fife, L. | M | 4 | |||||||
| 22 | Smith, L. | S | 2 | |||||||
| 31 | Fay, G. | M | 3 | â¦â¦â¦ | ||||||
| 32 | Robey, G. | M | 6 | â¦â¦â¦ | ||||||
| 33 | Schork, T. | S | 1 | â¦â¦â¦ | ||||||
| 51 | Hardy, B. | M | 5 | â¦â¦â¦ | ||||||
| 99 | Kipley, C. | M | 7 | â¦â¦â¦ | ||||||
| Totals | $ | â¦â¦â¦ | â¦â¦â¦ | $ | $ | |||||
1.) On January 31, Village Bank had 500,000 shares of $3 parvalue common stock outstanding. On that date, the company declareda 10% stock dividend when the market price of the stock was $62 pershare. The immediate effect of this dividend upon Village Bankwas:
A.)A reduction in cash of $3,794,500. | |||||||||||||||||||||||||||||||||||||||||
B.) A reduction in retained earnings of $3,100,000. | |||||||||||||||||||||||||||||||||||||||||
C.) A reduction in retained earnings of $150,000. | |||||||||||||||||||||||||||||||||||||||||
| D.) A liability to the stockholders of $150,000. 2.) Mayfair Corporation has outstanding 70,000 shares of $1 parvalue common stock as well as 20,000 shares of 7%, $100 par valuecumulative preferred stock. At the beginning of the year, thebalance in retained earnings was $800,000, and one year's dividendswere in arrears. Net income for the current year is $580,000.Compute the balance in retained earnings at the end of the year ifMayfair Corporation pays a dividend of $3 per share on its commonstock this year.
3.) During the years 2009 through 2011, Powers, Inc., reportedthe following amounts of net income (dollars in thousands):
4.) Hines Cannery issued capital stock in 2009 for $700,000.During 2009 the company paid dividends of $250,000. What is theeffect of these events in Hines' statement of cash flows for2009?
6.) Which of the following is a characteristic of manufacturingoverhead in a job order cost system?
|
7.) A job order cost system traces direct materials cost to aparticular job by means of:
A.) | Materials requisitions. |
B.) | A production budget. |
C.) | The Materials Inventory controlling account. |
D.) | A debit to the job cost sheet for the job. |
8.) Which of the following costing systems would always use jobcost sheets?
A.) | Job order costing. |
B.) | Process costing. |
C.) | Activity-based costing. |
D.) | All three systems. |
9.) Edwards Auto Body uses a job order cost system. Overhead isapplied to jobs on the basis of direct labor hours. During thecurrent period, Job No. 337 was charged $425 in direct materials,$475 in direct labor, and $190 in overhead. If direct labor costsan average of $16 per hour, the company's overhead application rateis:
A.) | $7.27 per direct labor hour. |
B.) | $6.40 per direct labor hour. |
C.) | $17.50 per direct labor hour. |
D.) | $40 per direct labor hour. |
10.) Marty's Metal Shop uses a job order cost system. It appliesoverhead to jobs at a rate of 175% of direct labor costs. Job No.2617 required $800 in direct labor costs. The job was initiallybudgeted to require $850 in direct labor costs. Overhead applied toJob No. 2617 during the period amounted to:
A.) | $850. |
B.) | $1,400. |
C.) | $1,275. |
D.) | Some other amount. |
11.) In a job cost system, the Work-in-Process Inventorycontrolling account may be reconciled to the total of the:
A.) | Employee time cards. |
B.) | Materials requisitions. |
C.) | Work-in-Process Inventory records for each department orprocess. |
D.) | Job cost sheets. |
12.) For the month of December, its first month of operations,the Radcliffe Corporation completed and transferred 800 units ofproduct costing $80,000 to produce to Finished Goods Inventory. IfRadcliffe sold 650 units during the same month, how much was costof goods sold for the same period?
A.) | $80,000. |
B.) | $8,000. |
C.) | $6,500. |
D.) | $65,000. |
13.) The computation of equivalent full units is generally notnecessary when:
A.) | Beginning work-in-process inventories are significantly largerthan ending work-in-process inventories. |
B.) | Beginning and ending work-in-process inventories differ onlyslightly. |
C.) | The number of units in ending work-in-process exceeds the numberof units completed and transferred to finished goods during theperiod. |
D.) | Per-unit costs become distorted as a result of not computingequivalent full units of production. |
14.) During July, the equivalent full units of direct materialsadded to the product worked on by Department A amounted to a totalof 90,000 applied as follows: beginning inventory, 20,000 units;units started and completed in July, 60,000 units; and endinginventory, 10,000 units. Assuming that the cost of direct materialsrequisitioned by the department in July was $135,000; the amount ofthe materials cost to be assigned to the ending inventory wouldbe:
A.) | $16,875. |
B.) | $54,000. |
C.) | $15,000. |
D.) | $18,000. |
