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Bieg • Toland
Payroll 2018 2018 Payroll
Accounting Accounting
Ed i t i o n Ed i t i o n
Payroll Accounting
Bieg • Toland
Payroll Accounting
with
Payroll Accounting
with
To register or access your online learning solution or purchase materials
for your course, visit www.cengagebrain.com. 2018
Edition
Bieg • Toland
Copyright 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-202
91057_cvr_ptg01_hires.indd 1 SE — Bieg/Toland — Payroll Accounting, 2018 Edition ISBN-13: 978-1-337-29105-7 ©2018 Designer: Lou Ann Thesing 11/09/17 5:17 PM
Text & Cover printer: QuadGraphics Binding: Paper Trim: 9” x 10.875” CMYK
2018
FEDERAL PAYROLL TAXES CALENDAR
The calendar below and on the last page of the text shows the due dates for various returns, reports, and statements that employers must file,
as well as the due dates for monthly and quarterly deposits. The due dates for semiweekly depositors and those affected by the $100,000
one-day rule are presented in Chapter 3.
JANUARY
10. Form 4070. Employees receiving cash tips in December of $20 or more must report them to their employer. (See Chapter 3.)
16. Form 1040-ES. Final payment of 2017’s estimated tax due by self-employed persons required to file declarations, unless Form 1040
is filed no later than February 1. Farmers and fishermen file declarations and pay estimated tax or file final returns for 2017 by March 1
instead of making estimated payments.
Electronic transfer of FICA taxes and withheld federal income taxes for December due. (See Chapter 3.)
31. Form W-2. Employer must furnish employees with copies of the Wage and Tax Statement, showing wages paid, federal income taxes
withheld, and FICA taxes withheld during 2017. Employees terminated during 2018 may request that Form W-2 be furnished to them
within 30 days of their last payment of wages or the date of their request, whichever is later.
Form W-3, along with SSA copy of Form W-2 for each employee whether filed electronically or using paper forms. (See Chapter 4.)
Form 940. Annual return and deposit or remittance of any undeposited tax due for 2017 under Federal Unemployment Tax Act. If tax
deposits paid employer’s tax liability in full, return may be delayed until February 12. (See Chapter 5.)
Form 941. Quarterly return and remittance or deposit of undeposited FICA taxes and withheld income taxes for 4th calendar quarter
of 2017. If timely deposits of tax have been made that pay employer’s tax liability in full, return may be filed on or before February 12.
(See Chapter 3.)
Form 943. Annual return for agricultural employees, showing income taxes withheld as a result of voluntary withholding agreement
and required FICA information for covered employees. (See Chapter 3.) Individuals (other than farmers or fishermen) may file final
return for 2017 instead of filing estimate on January 16.
Form 944. Annual return of FICA and withheld income taxes for employers who owe $1,000 or less in employment taxes per year.
Form 945. Used to report income tax withheld during 2017 for nonpayroll items such as backup withholding and withholding on
pensions, annuities, IRAs, gambling winnings, and payments of Indian gaming profits to tribal members. If timely deposits have been
made, employers have until February 12 to file the return.
Form 1099. All businesses give recipients an annual information statement for certain payments made in 2017 such as compensation
to nonemployees, dividends, interest, prizes and awards, rents, royalties, etc.
FEBRUARY
12. Form 940. Annual return due, provided timely deposits for 2017 satisfied employer’s tax liability in full.
Form 941. Quarterly return showing withheld income taxes and FICA taxes for 4th calendar quarter of 2017 due, provided timely
deposits for that quarter satisfied employer’s full tax liability. (See Chapter 3.)
Form 4070. Employees receiving cash tips in January of $20 or more must report them to their employer.
15. Electronic transfer of FICA taxes and withheld federal income taxes for January due.
Form W-4. This is the expiration date for Form W-4 on which employees claim exemption from federal income tax withholding
because they anticipate no federal income tax liability.
28. Forms 1099 and 1096. Annual information returns due to report compensation of $600 or more paid to nonemployees, dividends in
excess of $10, and compensation from which federal income taxes were not withheld and which was not reported on Form W-2. (See
Chapter 4.) Last day for farmers and fishermen to file tax return for 2017 instead of filing estimate on January 16.
MARCH
12. Form 4070. Employees receiving cash tips in February of $20 or more must report them to their employer.
15. Electronic transfer of FICA taxes and withheld federal income taxes for February due.
APRIL
2. Electronic filing deadline for copy A of W-2G issued.
10. Form 4070. Employees receiving cash tips in March of $20 or more must report them to their employer.
16. Form 1040. Final return and payment of individual’s income tax due.
Electronic transfer of FICA taxes and withheld federal income taxes for March due.
Form 1040-ES. Declaration and payment of 1st quarter estimated tax for 2018 by individuals other than farmers and fishermen.
30. Form 941. Quarterly return and remittance or deposit of undeposited FICA taxes and withheld income taxes of less than $2,500
for 1st calendar quarter of 2018. If timely deposits for the quarter have paid employer’s tax liability in full, the return may be delayed
until May 10.
Electronic transfer of FUTA taxes due for the 1st calendar quarter of 2018 if liability exceeds $500. (See Chapter 5.)
Status determination date for adjusting an employee’s withholding to correspond to the employee’s changed withholding status.
(Continued on inside back cover)

2018 edition
Payroll Accounting
Bernard J. Bieg
Bucks County Community College
Judith A. Toland
Bucks County Community College
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Payroll Accounting, 2018 Edition © 2018, 2017 Cengage Learning®
Bernard J. Bieg and Judith A. Toland
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cated page of “As We Go To Press” updates.
Chapter 1
Affordable Care Act
Since proposals for the Affordable Care Act repeal have failed, the health insur-
ance mandates for employers and individuals remain the law. Unless and until it
is changed by Congress, it is still in effect.
New Form I-9

U.S. Citizenship and Immigration Services (USCIS) released a new version of
Form I-9, Employment Eligibility Verification. Employers must complete Form
I-9 for all newly hired employees to verify their identity and authorization to
work in the United States. Employers are required to begin using the new version
of Form I-9 beginning on January 22, 2018.
Chapter 2
“Living Wage”
Preemption laws, which bar cities or counties within the state from setting higher
minimum wage rates, are a trend that is spreading (currently nine states have
adopted these laws). Legal challenges from city officials are sure to follow.
White-Collar Workers
Plans to hike the salary threshold to qualify for overtime pay to $47,476 have
been changed to $33,000. Currently, the $23,660 threshold is still the basis that
is applied.
Chapter 3
Electronic Deposits
Users of the Electronic Federal Tax Payment System (EFTPS) can sign up for a
new e-mail feature that will allow them to receive e-mail notifications about their
electronic tax payments (reminders of scheduled payments, confirmation of pay-
ments, and any changes made to the payments).
FICA-OASDI Taxable Wage Base

In this edition of the textbook, we have used the 2017 wage base of $127,200 and
current projections have projected the 2018 wage base to be $130,500. Actual
annual increases to the FICA-OASDI taxable wage base are announced in Octo-
ber of the preceding year based on current economic conditions.
Chapter 7
Effective July 1, 2017, until June 30, 2018, the Philadelphia Wage Tax is 3.8907
percent (resident) and 3.4654 (non-resident). iii
P R E FAC E
PAYROLL ACCOUNTING AND TODAY’S

BUSINESS ENVIRONMENT
Today’s payroll accountant is a major player on a company’s management team.
Management’s need for timely and accurate payroll cost data as a part of the
total planning step has moved payroll from a disbursement and recording func-
tion to an integral part of the management process.
With constant changes in the legal environment, technology advancements
in the administration of payroll functions and with tax withholding responsibil-
ities, the payroll accounting occupation has become proactive. During this time
when the need for accurate information is so critical, Payroll Accounting has
established a record of being the most thorough book on the market for over
20 years. Each edition has been updated with the most current data available.
The 2018 edition of Payroll Accounting continues to provide the most user-
friendly payroll accounting coverage, in addition to significant resources that
will aid instructors and students alike in their mastery of payroll accounting.
CengageNOWv2
Payroll Accounting 2018 is fully integrated with CengageNOWv2, a powerful
course management and online homework tool that provides robust instructor
control and customization to optimize the student learning experience and meet
desired outcomes.
“To students, it’s quick CengageNOWv2 Includes

feedback, and they can
• Integrated eBook
improve the grades by working
• End-of-chapter homework with static and algorithmic versions
on the questions multiple
• Continuing Payroll Problems (CPP)
times; to instructors, it’s less
• Adaptive Study Plan and multimedia study tools
grading time, and easy to
• Test bank
evaluate students’
• Course management tools and flexible assignment options
performance.”
• Gradebook Analytics
-Jack Wu,
• REVISED Mastery Problems
Chemeketa Community College
• Tell Me More Lecture Activities with assignable questions
• Robust feedback
• Audit Tests in CengageNOWv2
• MORE! Show Me How Demonstrative Videos
iv
Payroll Accounting 2018 PREFACE v
Tell Me More Lecture Activities

Tell Me More Lecture Activities are available and correlate to each Learning
Objective (LO). These Lecture Assignments review the material covered in each
LO, giving students a way to review what is covered in each objective in a digest- TELL ME MORE
ible video activity format so they come to class more prepared and ready to
participate.
Audit Tests in Payroll Project

The Student Audit Tests are designed to help students as they work through the
Payroll Project. These tests can be assigned specifically to the Payroll Dates inside
CengageNOWv2, and students can answer them to ensure they are fully under-
standing the concept and process of the payroll project.
MORE! Show Me How Problem Demonstrative Videos

Show Me How Videos are available for all continuing payroll problems at the
end of each chapter and the most commonly assigned end-of-chapter assignments
in both the A Set and B Set. These Videos provide students with both a detailed
SHOW
walk-through of a similar problem and problem-solving strategies.
ME HOW
Going Further in Payroll Accounting

• Updated: Detailed Check My Work and Post-Submission feedback with
explanations and tips for completing the problem
vi PREFACE Payroll Accounting 2018
• REVISED: Mastery Problems within CengageNOWv2 are designed to help

students understand difficult topics in payroll accounting by breaking
down the topic into smaller parts. Each part builds on other parts through
a systematic problem-solving process. These problems address key chapter
learning objectives and are algorithmic for versatile assignment options.
• CengageNOWv2 contains numerous algorithmic problems that allow

instructors to have more flexibility and assurance that students are com-
pleting the projects on their own.
• Randomized Test Bank answers within CengageNOWv2 allow instructors
to assign the same multiple-choice test problems, but CengageNOWv2 will
randomize the selection choices. The selection order for each student
changes, combating student cheating. See the following example.
Payroll Accounting 2018 PREFACE vii
The entry to deposit FICA taxes and The entry to deposit FICA taxes and
federal income taxes withheld involves federal income taxes withheld involves
all of the following accounts except: all of the following accounts except:
a. Payroll Taxes. a. Cash.
b. FICA Taxes Payable—OASDI. b. Employees FIT.
c. Cash. c. Payroll Taxes.
d. FICA Taxes Payable—HI. d. FICA Taxes Payable—HI.
e. Employees FIT. e. FICA Taxes Payable—OASDI.
3-10 CHAPTER 3 • Social Security Taxes Payroll Accounting 2018
KEY FEATURES
Taxable Wage Base
• Mastery,TheApplication,
employer must consider the taxable wage base when
Motivation—Payroll computing the
Accounting OASDIand
2018
portion of the FICA tax. The law exempts wages that exceed this base during
CengageNOWv2 help($127,200
the calendar year you elevate
for 2017, student
please seethinking
“AS WE GOwith unique
TO PRESS” for content that
addressesestimated
each stage of theOnce
2018 OASDI). learning
the OASDI process,
taxable wageprepares students
base has been reached, to learn,
all payments made to the employee during the remainder of the year are not
providestaxable.
practice opportunities
The wage base applies tothat
amountsbetter prepareinstudents
paid employees for the exam,
a calendar year
and helpsandstudents achieve
not to the time when themastery with
services were toolsbythat
performed help them
the employees. make connec-
The HI
portion of the FICA tax is 1.45 percent withheld on total earnings plus an addi-
tions andtional
see0.9the big on
percent picture.
wages over $200,000. The employer does not “match” the
• The Washington Update—The
Employee’s Supplemental HI rate ofWashington Update,
0.9 percent on wages which
in excess appears within
of $200,000.
The employer HI rate is 1.45 percent on all wages. Just as social security benefits
Chaptersincrease
2, 3, each
4, and 5, advises
year based on changes thein student
the Consumer of Price
the tax
Index,code and tax laws
the taxable
that werewage
usedbasein the current
is increased also. edition. However, because tax code, tables,
This means that an employee who makes $34,000 would pay the FICA tax
and laws(6.2%
may1be 1.45%) on his or her total earnings,after
changed by Congress while anthe text has
employee been$1printed, the
who makes
student ismillion
advised
would on how,
pay the in practice,
HI portion (1.45%) ontheyhis or can find
her total the plus
earnings most current tax
addi-
tional HI tax (0.9%) on wages in excess of $200,000, but only $127,200 of the
code, tables, and laws.
$1 million would be taxed at 6.2 percent. Payroll Accounting 2018
WASHINGTON UPDATE
3-15A • LO 4, THE 5 NEW ADMINISTRATION

SHOW
See Example HAS
3-5 EXPRESSED INTEREST
on page 3-20, seeINFigure
RESCINDING
3.10THE
on CURRENT
page 3-26 ME HOW
0.9 PERCENT ADDITIONAL EMPLOYEE HI TAX ON WAGES IN EXCESS OF $200,000.
The taxable wages and withheld taxes for Stafford Company (EIN 00-0001462), semiweekly depositor, for the first
quarter of 2018 follow.
PLEASE SEE “AS WE GO TO PRESS” FOR THE MOST CURRENT UPDATES.
Semimonthly Gross and FICa Withheld FICa Withheld Federal Income
paydays taxable Wages OaSDI HI tax Withheld
Determining OASDI tax:
IRS CONNEC • TION Enhanced
1/12
1/31 If:
Excel Templates—The Excel Templates include a feedback
$ 24,500
23,985
$1,519.00
1,487.07
$ 355.25
347.78
$ 3,185.00
3,090.00
section
In 1950, there were 16 workers 2/15 giving Cumulative instructors
Wages
25,190 1 Current theWage option Payment
1,561.78 for 6adding OASDI Wage a365.26
comment/grade
Base, then and an
3,410.00
area
paying into the social security 2/28for $52,400to
students show
25,530 1 their $6,000work.
1,582.86 5 $58,400
370.19 3,497.00
system for every one person 3/15 compute the OASDI 24,950tax on the entire wage payment. ($6,000361.78
1,546.90 3 0.062 5 $372.00) 3,385.00
• By 2042,
collecting benefits. Superior
3/30 Examples—Examples 25,100 are
1,556.20identified and363.95 numbered within 3,400.00 the
the projection is a ratio of If:
text. Various $149,255
end-of-chapter $9,253.81 $2,164.21 $19,967.00
2 to 1. Cumulative Wages 1 Current problems Wage Paymentare 7 OASDIidentified Wage Base,as athen
problem similar to
Payrollan example within the1 text.
941 on See thefor examples below.
a. Complete $108,800
Schedule B of Form $26,000
page 3-51 the 5 first quarter $134,800
for Steve Hazelton,
Accounting 2018 CHAPTER 3 • Socialthe owner
Security Taxesof 3-31
Stafford Company.
compute the OASDI tax on the part of the current wage payment that brings the
b. Below list the due dates
cumulative wages of up
eachtodeposit
the OASDI in thetaxable
first quarter.
wage limit. ($108,800 1 $18,400 5 “Excellent! In the past it was often
Yeld Company failed to pay its employment taxes of $5,000 for March (due April 16) until May 21. The failure to pay penalty
$127,200) EXAMPLE 3-7
assessed against Yeld Company is: paydays
difficult to point students to a
$18,400 3 0.062Deposit 5 $1,140.80 Due Dates
Failure to Pay Tax ($5,000 3 0.5% 3 2)January 12 5 1. $50.00
particular example when there was
InterestEmployees’
on Taxes Due ($5,000 FICA (OASDI/HI)
3 0.04 3 35/365) 31 Taxes
January 5 2.and 19.18
Withholdings more than one on a page.”
FICA requires employers to collect the OASDI/HI
Total Penalty $69. 18taxes from their employees and
February 15 3. -Karen Spray,
ON THE JOB pay the taxes to the IRS at the same time they pay their own tax. The employer
Note: In addition, a penalty for failure to make a timely depositFebruary
will also be assessed.
28 4.
deducts the tax from the wages at the time of payment. The amount of each tax Northeast Community College
Cost of employer-provided to be withheld is computed Marchby 15applying 5. to the employee’s taxable wages the tax
group-term life insurance in rate in effect at the time that30 the wages 6. are received. In calculating the amounts
Failure March
excess of $50,000 is taxable to Make Timely Deposits
of FICA taxes to withhold from employees’ pays, the employer may disregard
and is subject to social
Penalties may apply anyiffractional
employerspart do not
of a make required
cent, unless deposits
it is one-half oncent
timeorinmore, ON THE JOB
an which must be “I like this connection; students can
security and Medicare tax
withholding.
authorized government
3-16A • LO 5 rounded depository.
up
Seeone cent. 3-5 on page 3-20, Example 3- 6 on page Deposits
Example 3-29, are applied to the easily test themselves on a specific
Example 3-7 on page 3-31 most recent tax liabilities example.”
Deposits made 1 to 5 calendar
Vulcan CompanyRuth
days
is aEngle
late pay on January 5, 2018,2 for
receives percent
workofdone
the undeposited
during for taxes
the last week of December
2018 is2017. The wageswithin
would bethe quarter; however, a
monthly
taxedlate
depositor whose tax
as income in the calendar year 2018,5using 2018
liability
tax rates.
March $2,505.
depositor can designate to the -Jennifer Morton,
Deposits made 6 to 15 days percent of the undeposited taxes
1. What is the due date for the deposit of these taxes? IRS the period to which a
Deposits made 16 or more days late 10 percent of the undeposited taxes Ivy Tech Community College
2. Assume that no deposit was made until April 30. Compute the following penalties: deposit is to be applied. The
Deposits made at unauthorized financial institutions or 10 percent of the undeposited taxes employer has 90 days from
a.
directly to IRS
Penalty for failure to make timely deposit. $ of a penalty notice to
the date
b. to
Penalty for failure to fullybut pay tax. make $ the designation.
Deposits subject electronic deposit requirements 10 percent of the tax deposit required
not deposited c.byInterest
EFTPS on taxes due and unpaid (assume a 4% interest rate). $
d. Total
Amounts unpaid penalty
more than 10 days imposed.
after IRS notice 15 percent of the undeposited taxes $
Greerson Inc. must make a deposit of $1,800 on June 15. The deposit was made 11 days late. The penalty assessed against EXAMPLE 3-8
Greerson is:
Failure to make timely deposit ($1,800 3 5%) 5 $90
Failure to Furnish Payee Statements
If employers willfully fail to furnish their employees with properly executed wage
viii PREFACE Payroll Accounting 2018
COMPUTERIZED PAYROLL PROJECT

Chapter 7—The Payroll Project
Chapter 7 consists of a practice set or simulation. The student applies the knowl-
edge acquired in the first six chapters to a practical payroll simulation as the
payroll accountant for Glo-Brite Paint Company. The Payroll Project can be com-
pleted manually using fold-out Payroll Registers located at the back of the text or
by completing the Excel templates located on the Payroll Accounting Web site:
www.cengagebrain.com.
Appendix A—Excel Template Instructions for the Glo-Brite

Payroll Project (Chapter 7: Short Version)
Appendix A consists of an electronic version of the books of account and payroll
3-4 CHAPTER 3 • Social Security Taxes records. It has specific instructions
Payroll Accounting 2018 for using the Excel template, illustrative case
demonstrating November 20 payroll, and complete instructions for the short
Exempt Employees
version are
Employees of not-for-profit organizations project.
subject toStudents are ser-
FICA taxes. Some encouraged to complete one manual payroll from
vices, such as those performed Chapter 7 prior
by duly ordained to of
ministers using theremain
churches, Excel template. The Excel template is located on the
exempt from FICA taxes, but the individuals are then subject to self-employment
Payroll
tax on their net earnings. Ministers, Accounting
certain Weborders,
members of religious www.cengagebrain.com.
site: and
Christian Science practitioners previously electing exemption from social security
coverage may now be covered by filing a waiver form with the IRS. Once an elec-
tion to be covered by social security is made, it is irrevocable.
OUTSTANDING PEDAGOGY
The following are also exempt from both the OASDI and HI portions of
5-10 the tax:
CHAPTER 5 • Unemployment Compensation Taxes Payroll Accounting 2018
• Medical interns.
• Student nurses. Credits Against FUTA Tax Learning Objectives
• LOInmates
3 of U.S. penal
Theinstitutions.
actual FUTA tax paid is usually only 0.6 percent, since employers are enti-
• federal
Compute the Those tled to aincredit
serving temporarily
unemploy- against
case of their FUTA
emergency taxflood,
(storm, liability for contributions made under
etc.). Learning Objectives are enumer-
approved state unemployment compensation laws. The maximum credit permit-
ment tax, the credit against the
tax, and any credit reductions that ted is 5.4 percent (90% of 6%). Thus, in the preceding example where the gross ated at the beginning of each chap-
might apply.Voluntary CoverageFUTA tax rate is 6.0 percent, the net FUTA rate would be 0.6 percent if the full
Coverage under FICA can5.4bepercent
extended to applied.
credit certain classes
Even if of servicespay
employers thata otherwise
SUTA rate of less than 5.4
ter, and the numbers are repeated
percent, they
would be excluded. For example, still get
service in the
thefull credit of
employ against theor
a state FUTA
localtax.
govern- next to the start of the applicable
ment that began prior to April 1, 1986, is still exempt for the OASDI portion of
Payroll Accounting 2018
the FICA tax. However, coverage can be extended to these employees by means
text
CHAPTER 3 • Social Security coverage
Taxes 3-5 for easy navigation.
EXA
ofM P L E 5 -agreement
a voluntary 4 Totalentered into
taxable earnings byexample)
(above the ...........................................................................................................
state and secretary of health and $49,290.00
human services. When aNetstate elects
rate of tax voluntary
(6.0% 2 coverage, it becomes responsible
5.4%) ....................................................................................................................... 3 0.6%
3.2
F I G U R Efor Amount of net
the collection and payment ofFUTA
thetaxFICA
...................................................................................................................................
tax as if it were covered employment. $ 295.74
THE JOB Contractor Status
ONIndependent
Test for
Eighty percent of the FUTA
Workers
tax paid SELF-STUDY
be classified
maygoes QUIZ
as independent
to pay federal 3-1To obtain
contractors if they: the maximum credit of 5.4 percent against the federal tax, the
Self-Study Quizzes
employer must make the state contributions on or before the due date for filing
1.(4 percent)
Hire, supervise,
Which
and pay assistants. the annual return under FUTA (see page 5-24)—January 31, 2019. If the employer
and state
of the following are covered by FICA (indicate Yes or No)? Self-Study Quizzes appear through-
2.(76 percent)
Determine administrative
the sequence of their work.
1. Andrian
costs. The other 20 percent
3.goes
Setinto
theiranown hours2.of work.
is late ainfull-time
Mitchell, paying the life state contributions,
insurance salesperson. the credit is limited to 90 percent of the
out each chapter and test the
extended John Sain, aamount
federal of the depositemployee,
government that wouldhired have in been 1990. allowed as a credit if the late contri-
4.unemployment
Work for as many
account.
employers
benefits
3. Bonnie as they wish.
Stone,butions
a realhad estatebeen paid on time.
agent. understanding of major concepts.

5. Are paid by the job.4. Stuart Schuck, who offers lawn care service to homeowners in the
6. Make their services available to the public.
neighborhood.
Answers to the quizzes are avail-
7. EHave
XA an Mopportunity
Note: L E for
PAnswers 5 profit
5 oron
- are loss.page
Sutcliff3-33.
e Company had taxable wages totaling $87,500 in 2018. During the year, the company paid some of its state able within each chapter.
8. Furnish their own tools. contributions after the January 31, 2019, cutoff. The penalty for tardiness is shown in the following calculation of the firm’s
9. Have a substantial investment in their net FUTA tax for 2018:
trade.
10. May be dismissed only under terms of Amount contract. of gross FUTA tax ($87,500 3 6.0%) ............................................................................... $ 5,250.00
Independent Contractor
State taxable wages ..................................................................................... $87,500
Sutcliffe’s SUTA tax rate ................................................................................ 3 5.4%
Sutcliffe’sindependent
The FICA tax law identifies contractors as persons who follow
SUTA tax ....................................................................................... $ 4,725an
independent trade, business, orofprofession
Sutcliffe’s SUTA taxwhere payments: they offer their services to the
Over the Line Real-World
Breakdown
public. The Small BusinessBeforeAdministration
1/31/19—$3,000 3 100% estimates that nearly 5 million work-
credit ...................................................................................... (3,000.00)
ers are independent contractors. The test
After 1/31/19—–$1,725 3 90% increditFigure 3.2 determines independent
........................................................................................ (1,552.50)
Over the Line
contractor status.
Employers do not pay
Amount of net FUTA tax...................................................................................................................
If theor
company had made timely
withhold payroll payments taxesof its state
oncontributions,
payments the amount
madeof its tonetinde-
$ 697.50
FUTA tax would have been
Ethics Cases
Stanford Yellow
pendent Cab of Mountain
contractors. reduced to $525,View,
However, the for a savingswas
individual of $172.50, assessed
as follows: $3 million in back
contractors are liable for social The Over the Line feature illus-
pay andsecurity
damagestaxesfor misclassifying
Amount of gross
(self-employment dozens
FUTA
taxes) taxon ($87,500
theof3net drivers
6.0%) as of independent con-
...............................................................................
earnings their businesses. $5,250.00
Misclassifying
tractors. Drivers employees
were required to carries
Total taxable a penalty days aforweek the employer.
wages......................................................................................
work six for 12-hour Generally, shifts.$87,500 the
trates cases of companies either
Driverspenalty will be the
were forced to abide
Credit againstshare
employer’s
Totalby
credita
tax .........................................................................................
dressofcode FICAand taxesnot plusallowed the income to change and3FICA 5.4%
...................................................................................................................................... 4,725.00
intentionally or unintentionally
taxes that were not withheld fromFUTA taxthe employee’s earnings. If the employee
their schedule or operate independently.
Amount of net 2
($87,500 3 0.6%) ..................................................................................
did report the earnings on his or her federal tax return, the penalty is voided.
$ 525.00
crossing the boundaries of fair-
If not reported, the employer may qualify for a reduced rate of 1.5 percent $697.50 2 $525.00 of 5 $172.50 savings ness in their interpretation of
the employee’s wage if a Form 1099 (see page 4-31) was filed (3.0 percent if
not filed). A reduced rate The might credit alsoagainst applythe toFUTA the employee’s tax for stateshare contributions of FICAdoes not apply to payroll laws.
Taxabletaxes—20
Wages percent of the anyfullSUTA FICA payments tax if deducted Form 1099 fromwas employees’filed (40 paypercent and penalties if and interest
The amountnot of
filed).
wages paid by not employers
included into thetheir contribution employees rate assigned during by the the state. calendar LO 2
year determines the amount ofExperience
OASDI/HI taxes. The basis of payment may be
Rating Identify the types of compensation
hourly, daily, weekly, biweekly,Insemimonthly, monthly,
some cases, employers
fund at the
a rate
annually,
may pay piece
contributions rate,
into Check Figures Included at the End of This Text
theiror a unemployment
state that are defined as wages.
lower than 5.4 percent. The method by which the employer con-
percentage of profits. Wages include following:
Check figures provide help and assist users in staying on track as they learn the
tributions may be adjusted because of a favorable employment record is referred
as experience whether
rating or merit rating.
1. Actual money received bytoemployees, called Thus,or
wages an salaries.
employer’s favorable experience
2. Cash value of meals and lodgingintricacies
provided for of the payroll accounting.
rate (employment record) qualifies the employer for a SUTA rate lower than
convenience of the
employees.
3. Bonuses and commissions paid by the employer with respect to
employment.
Other common types of payments that are considered wages under FICA are
available. In such cases, the employer may rely on any one of the following docu-
ments as evidence of age for minor employees:
1. Birth certificate (or attested transcript thereof) or a signed statement of the
recorded date and place of birth issued by a registrar of vital statistics or
Payroll Accounting 2018 recording births. ix
other officer charged with the duty ofPREFACE
2. Record of baptism (or attested transcript thereof) showing the date of
birth of the minor.
3. Statement on the census records of the Bureau of Indian Affairs and signed
Key Points Summary by an administrative representative thereof showing the name, date, and
place of the minor’s birth.
This summary at the end of the chapter ties the key points in the chapter The
to the
employer should maintain a copy of the document or indicate in the
Learning Objectives. payroll records which document verified the minor’s age.
Use of Marginal Icons Wage Theft

Wage theft is a term that refers to situations when employers do not pay employ-
Use of marginal icons (“On the Net,” “News Alert,” “IRS Connection,” and
ees in accordance with statutory or contract requirements. This includes viola-
tions such as not paying minimum or agreed-upon wages, not paying the proper
“On the Job”) helps integrate the real-world applications of this facts-intensive
overtime rates, having employees working off of the clock or under the table, or
area of study. “On the Net” icons allow optional integration of Internetmisclassifying
research employees as consultants. States are now attacking this problem
sites for learners. with increased costs of noncompliance. States’ remedies include assessing higher
fines and penalties, prohibiting companies from receiving state contracts, denying
The icons in each chapter highlight the most current forms, instructions, andbusiness licenses, or criminalizing the violations.3
or canceling
wage and tax2-2laws available.
CHAPTER 2 • Computing Wages and Salaries Payroll Accounting 2018
Penalties
The U.S. government may bring civil or criminal actions against employers
Coverage
IRS CONNEC TION who violate the FLSA. Violators of the wage and hour provisions of the FLSA
The FLSA provides for two bases of coverage—enterprise coverage and individual
are liable for the unpaid minimum wage and overtime requirements and could
ON THE JOB employee coverage.
Employees have two years to be assessed equal amounts in liquidated damages, besides reasonable attorneys’
sue for pay mistakes involving fees and court costs. This would result from court action brought by the U.S.
A National Call Center has Enterprise Coverage
unpaid minimum wage and government against these employers. The penalties that could result are:
been established by the unpaid includes
Enterprise coverage overtime, all
andemployees
three of an enterprise if:
Department of Labor to years to sue for willful
1. At least mistakes.
answer employees’ and two employees Misclassified
engage in interstate
In 2015, in commerce or produce Workers goods
for interstate
employers’ questions on a commerce.
settlements of over Interstate
8,700 commerce refers to the trade, trans-
• unintentional with a filed Form 1099 (showing nonemployee compensa-
portation,
range of employment issues. or communication
lawsuits, among several states or between a state and
the U.S. Department
tion)—1.5 percent of wages paid 1 20 percent of the employee’s social
The toll-free number is any place of outside that state.
Labor collected moreThe
thanlaw also covers employees if they handle,
security tax.
1-866-4-USA-DOL. $250 million
sell, or otherwise from on
work employers.
goods or materials that have been moved in or
• unintentional without a filed Form 1099—above penalties are doubled.
produced for interstate commerce, and
• intentional—100 percent of the worker’s federal income tax and social
2. The business has annual gross sales of at least $500,000.
security taxes.
NEW! Relatable Images

ON THE NET
Coverage extends, without regard to annual sales • volume,
in addition to thewho
to those above, the employer remains liable for any penalties for
operate:
failure to withhold, to file returns, and to pay taxes.
1. A hospital.
Images have been added throughout the
http://www.dol.gov/ 2. Atextbook
nursing home. to reinforce the topics and
concepts on a more visualoflevel.
U.S. Department Labor 3. An institution for the mentally ill.
3 “States, Localities Crack Down on Wage Theft,” PAYTECH, November 2015, p. 40.
Employment Standards 4. A school for mentally or physically handicapped or gifted children.
Administration homepage. 5. A preschool, elementary, or secondary school.
THOROUGH END-OF-CHAPTER MATERIALS
This site contains various
sections of code, such as
6. An institution of higher education.
7. A public agency.
affirmative action and
End-of-chapterworkers’
assignable materials
compensation. To includeThe matching quizzes,
enterprise coverage underreview
the FLSAquestions,
does not apply to family estab-
find the most useful lishments, often referred to as “mom and pop stores.” Thus, if the only reg-
discussion questions, practical problems,
information, choose the ESA
case problems,
ular employees and continuing
of an establishment include the payroll
owner, parent, spouse, child,
D A T E _________________ N A M E _____________________________________________________________
problems, which canthat
program also be you.
interests completedor using Excel. family members, the establishment is exempt from FLSA
other immediate
coverage.
Individual Employee Coverage

CONTINUING PAYROLL PROBLEM • A SHOW
ME HOW individual employee coverage, the FLSA covers a worker if the employee
Under
either engages in interstate commerce or produces goods for such commerce. Cov-
Refer to the partially completed payroll register you erage 2.alsoUsing the amount
includes recorded
employment in ainfringe
step 1, compute the
occupation closely related and directly
started at the end of Chapter 2. You will now determine
essential totaxes
thefor each employee
production and record
of goods in the appropri-
for interstate commerce. Coverage depends
the amount of FICA taxes to be withheld from each ate column.
on the activities of the individual employee and not on the work of fellow employ-
employee’s pay for the pay period ending January 8, 20--.
ees, the nature
Note: Keepofyour
the partially
employer’s business,
completed or the
payroll character
register for of the industry as a
1. In the Taxable Earnings columns, record the amount whole.useThus, even
at the endthough a business
of Chapter 4. does not meet the enterprise coverage test, it
of each employee’s weekly earnings that is subjectmust pay FLSA wages to those workers eligible for individual coverage.
to FICA taxes. All wages are taxable for OASDI and
HI taxes.
Glenn Morris works for a small manufacturing firm that has an annual sales volume of $370,000. Although the firm does not
meet the $500,000 volume-of-sales requirement for enterprise coverage, Morris is individually covered since he operates
machinery used to produce goods for interstate commerce.
Up-to-the-Minute Tax Law Changes
CONTINUING PAYROLL PROBLEM • B SHOW
ME HOW
Up-to-date knowledge IRS CONNEC is especially

TION important Employerfor today’s payroll specialists. This
edition has
Refer to the been
partiallycompletely
completed payroll updated to reflect
register you
The
2. Usingthe
FLSAtaxes tax
the amount
defines an law changes
recorded
employer thatacting
in step 1, compute
as “any affect
the
started at the endIfof
you want the
Chapter 2.IRS
Youto will now determine for each employee and recordperson directly or indirectly in
in the appropri-
payroll accounting.
the amount determine
of FICA Users
taxeswhether can
a worker
to be withheld find
isfromthese
each changes
the interest
ate of an listed
column. employer”oninthe “AstoWe
relation Go To In order to protect
an employee.
file Form employees, courts have defined “employers” in the broadest sense. Co-owners
employee’s pay foranthe
Press” page in the employee,
pay period
text and onSS-8,
ending
Determination of Employee
www.cengagebrain.com.
January 8, 20--.
Note: Keep your partially completed payroll register for
who control the day-to-day operations of the business are employers who are
1. In the TaxableWork
Earnings
Statuscolumns, record
for purposes of the amount use at the end of Chapter 4.
individually liable for violations of the law.
of each employee’s weekly
Federal earnings
Employment that is subject
Taxes
INSTRUCTOR RESOURCES
to FICA taxes.and
AllIncome
wages Tax
are Withholding.
taxable for OASDI
and HI taxes.Over 90 percent of these filed
Employee
An individual is an employee if he or she performs services in a covered employ-
Solutions Manual/Test Bank (Exams)/Achievement Tests
forms were determined to be
for employees. ment. As long as the common-law relationship of employer and employee exists and
the employment is not exempt from the provisions of the law, both are covered and
(ISBN:
CASE9781337291200)
PROBLEMS
ThisC1.robust
Auditing printed
Form 941. LOmanual
4, 5. contains the Learning Objectives, Chapter Out-
line,Your
and solutions
assistant to all aend-of-chapter
has just completed rough draft of Form exercises
Four of theand problems
company’s including
general ledger the
accounts are
941, shown on pages 3-72 and 3-73, for the quarter end- shown on the following two pages. The company’s 17
C ontinuing
ing March 31, Payroll Problems,
20--. As the Case
supervisor and Problems,
authorized andarethe
employees paidPayroll Project.
on the 15th The
and last day Test
of each
signer, you are auditing the form before it is mailed to month. The company is a semiweekly depositor. Indicate
ensure its accuracy. any changes that should be made on the form before it is
signed, dated, and mailed.
x PREFACE Payroll Accounting 2018
Bank questions and solutions are included to assist with choosing True/False,
Multiple-Choice questions, and problems for examinations. Achievement
Tests and keys are provided for additional testing and can also be
reproduced.
Test Bank Available with Cengage Learning Testing

Powered by Cognero
What is Cognero?
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• Full-featured, online-assessment system allows instructors to manage test
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bank content from multiple Cengage Learning solutions.
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• Deliver tests from your LMS, your classroom, or wherever you want.
Brown Mackie College
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• Create tests from school, home, the coffee shop—anywhere with Internet
access.
How do I access it?

• Log into your Cengage Learning SSO account at login.cengage.com.
• Add Payroll Accounting 2018 to your bookshelf (ISBN: 9781337291057).
• Once the book is added to your bookshelf, a link to access Cognero for
Payroll Accounting 2018 will appear, along with the link to the instructor
and student companion sites.
How do I start?
• Online resources, user guides, and instructional videos are available on the
instructor companion Web site at login.cengage.com.
• Please address any other technical questions to Cengage Learning Technical
Support at support.cengage.com.
Instructor Web Site

(login.cengage.com)
In addition to the material available to students online, the instructor site con-
tains password-protected instructor resources. Instructors can find the following
resources:
• Solutions Manual in Microsoft Word
• Comprehensive PowerPoint slides
• Achievement Tests and Keys
• Excel solutions for all end-of-chapter problems
• Excel solutions for Payroll Project (Chapter 7)
STUDENT RESOURCES
Student Companion Web Site
(www.cengagebrain.com)
Accessible through www.cengagebrain.com, the student Web site contains Check
Figures, Web Links, and PowerPoint slides. The Excel templates are posted for
the full version of the Glo-Brite Payroll Project (short-version templates are avail-
able from the instructor), Continuing Payroll Problems A and B, and selected
end-of-chapter problems designated by the Excel icon. In addition, the student
has access to important information contained in Appendix B: Social Security
Benefits and Appendix C: Unemployment Benefits.
AC K N O W L E D G M E N T S
Our sincere appreciation is extended to the many instructors and students who have contributed suggestions to make
the textbook more interesting, understandable, and practical to those who pursue the study of payroll accounting. As
a result of their very helpful recommendations, the textbook will better satisfy the learning needs of students and the
teaching needs of instructors. We would like to thank the following instructors for their valuable comments and
suggestions:
Steven Barela Stephanie Desormeaux Penny Hahn

Santa Fe Community College Delta Tech Henderson Community
Gretta Biggs Shelly Dhir College
Nunez Community College Unitek Diann Hammon
Melissa D. Boback Barbara Dickson JF Drake State Community
Cambria-Rowe Business College MTI College College
Robert Bolmer Kerry Dolan Toni R. Hartley
Everest Institute Great Falls College Montana Laurel Business Institute
Sharon Brown State University Lyle Hicks
Kaplan University Marianne Edmunds Danville Area Community
Tracy Carmichael Daymar College College
Fletcher Technical Community Annette Edwards JoLynn Hightower
College Tennessee College of Applied Texas State Technical College
John Chappell Technology West Texas
Northland Community and Dustin Emhart Kim Hurt
Technical College North Georgia Technical College Central Community College
Amy Chataginer Brian Fink Connie Jones
Mississippi Gulf Coast Danville Area Community Wake Tech
Community College College Lynn Krausse
Diane Clugston David Forester Bakersfield College
Cambria-Rowe Business College Haywood Community College Jessica Lancaster
Nancy Cowett Paul Franklin McCann School of Business and
Northern Maine Community Kaplan University Technology
College Connie Robin Gibson Greg Lauer
Bruce Creech TriCounty Community North Iowa Area Community
Sampson Community College College College
Margaret Lynn Crossman Marina Grau Gil Logan
Laney College Houston Community College Bryant & Stratton College
Amy Crouch Susan Greene Angel Luper
International Business College Cloud County Community Tri-County Technical College
Cher Cuppari College Jason Marconi
Everest University Steve Groves McCann School of Business and
William H. Dams Ivy Tech Community College Technology
Lenoir Community College Bruce Gunning Dan Marlow
Judy Daulton Kent State University at East American Business and
Piedmont Technical College Liverpool Technology University
xi
xii ACKNOWLEDGMENTS Payroll Accounting 2018
Sharon Martinez Michelle Parker Marie Stewart

Brown Mackie College Coastal Pines Technical College Laurel Technical Institute
Michelle Masingill Jamie Payton Juanita Sweet
North Idaho College Gadsten State Community Cape Cod Community College
Carole Maske College Shunda Ware
Southwestern Community Ann Price Atlanta Technical College
College Blue Ridge Community and Cammy Wayne
Drew McCabe Technical College William Rainey Harper College
Brown Mackie College Barbara Rice Lynn Whiddon
Linda McCarley Gateway Community and Central Georgia Technical College
Bevill State Community College Technical College Michele Wilkens
Dawn McKinley Patricia Scales Minnesota State University
Harper College Brookstone College Tomeika Williams
Lori Meseke Tracy Schmeltzer Rasmussen College
Vandalia Community Schools Wayne Community College Jack Wu
Joseph Malino Nicassio Karen Spray Chemeketa Community College
Westmoreland County Northeast Community Jessica York
Community College College National College
In addition, the authors would like to thank the following content providers and verifiers for the 2018 edition:
Bernie Hill, Spokane Falls Community College, retired instructor, for preparing the Excel templates and for
verifying the text and all the elements on the Web site and verification of CengageNOWv2 and all end-of-chapter
material.
Lisa Swallow, Program Director/Associate Professor, Missoula College, University of Montana Business and
Accounting Technology, for aid in end-of-chapter verification, supplemental items, and CengageNOWv2
verification.
Molly McFadden-May, Tulsa Community College, Assistant Professor, for aid in the CengageNOWv2
end-of-chapter feedback revisions.
A B O U T T H E AU T H O R S
Bernard J. Bieg
A
fter receiving his Master’s in Busi-
ness Administration from the Uni-
versity of Notre Dame and passing
Courtesy of Steve Bacher, Bucks County Community College
the Certified Public Accountants’ exam

in the early 1970s, Bernard Bieg turned
his attention toward a career in teaching.
He has been a professor at Bucks County
Community College for more than 30
years. During that time, he has taught the
whole spectrum of accounting offerings,
including payroll accounting. He has main-
tained strong connections with today’s
business world by serving as an internal
auditor for a local nonprofit organization.
His association with this textbook began
in 1977 as a co-author with one of the
originators of the book, Bill Keeling.
Judith A. Toland
J
udith Toland received her Master’s
Degree in Education from Temple Uni-
versity in 2002, her Bachelor’s Degree
in Business Administration—Accounting
Courtesy of Steve Bacher, Bucks County Community College
from Bloomsburg University in 1981,

and her Associate’s Degree from Bucks
County Community College in Business
Administration in 1979. Judy has taught
Accounting courses at BCCC since 1989
and is currently a professor in the Business
Studies Department. Judy earned the pres-
tigious Certified Payroll Professional (CPP)
designation in 2011.
xiii
CO N T E N T S
A S W E G O TO P R E S S .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iii
P R E FA C E .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iv
A C K N O W L E D G M E N T S.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . x i
A B O U T T H E AU T H O R S .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . x iii
1 The Need for Payroll and Personnel Records................................1-1

The Payroll Profession.......................................................................... 1-2
Fair Labor Standards Act..................................................................... 1-3
Federal Insurance Contributions Act.................................................... 1-4
Income Tax Withholding Laws............................................................ 1-4
Unemployment Tax Acts...................................................................... 1-4
Recordkeeping Requirements............................................................... 1-5
Fair Employment Laws........................................................................ 1-5
Other Federal Laws Affecting the Need for Payroll
and Personnel Records......................................................................... 1-8
Other State Laws Affecting the Need for Payroll and
Personnel Records...............................................................................1-13
Human Resources and Payroll Accounting Systems............................1-14
Human Resources System.................................................................. 1-15
Recordkeeping System........................................................................ 1-22
Payroll Accounting System................................................................. 1-23
2 Computing Wages and Salaries..................................................2-1

The Fair Labor Standards Act.............................................................. 2-1
Determining Employee’s Work Time.................................................. 2-15
Records Used for Timekeeping........................................................... 2-19
Methods of Computing Wages and Salaries....................................... 2-22
3 Social Security Taxes.................................................................3-1

Coverage Under FICA.......................................................................... 3-1
A Self-Employed Person..................................................................... 3-13
Employer Identification Number........................................................ 3-14
Employee’s Application for Social Security Card (Form SS-5)............ 3-16
xiv
Payroll Accounting 2018 CONTENTS xv
Returns Required for Social Security Purposes.................................. 3-17

Preparing Form 941 (Employer’s Quarterly Federal Tax Return)....... 3-22
Failure-to-Comply Penalties............................................................... 3-29
4 Income Tax Withholding............................................................4-1

Coverage Under Federal Income Tax Withholding Laws...................... 4-1
Tax-Deferred Retirement Accounts...................................................... 4-8
Withholding Allowances.................................................................... 4-10
Federal Income Tax Withholding....................................................... 4-15
Other Methods of Withholding.......................................................... 4-18
Supplemental Wage Payments............................................................ 4-19
Wage and Tax Statements.................................................................. 4-22
Returns Employers Must Complete.................................................... 4-29
Information Returns.......................................................................... 4-29
Independent Contractor Payments..................................................... 4-31
Backup Withholding.......................................................................... 4-31
Electronic Filing Form W-2 and Information Returns........................ 4-31
Withholding State Income Tax........................................................... 4-32
5 Unemployment Compensation Taxes..........................................5-1

Coverage Under FUTA and SUTA........................................................ 5-2
Unemployment Compensation Taxes and Credits................................ 5-9
Unemployment Compensation Reports Required
of the Employer.................................................................................. 5-19
6 Analyzing and Journalizing Payroll.............................................6-1

The Payroll Register............................................................................. 6-1
The Employee’s Earnings Record.........................................................6-4
Recording the Gross Payroll and Withholdings....................................6-6
Methods of Paying Wages and Salaries.............................................. 6-13
Recording Payroll Taxes..................................................................... 6-18
Recording Workers’ Compensation Insurance Expense...................... 6-22
Recording the Deposit or Payment of Payroll Taxes........................... 6-23
Recording End-of-Period Adjustments............................................... 6-24
Summary of Accounts Used in Recording Payroll Transactions......... 6-26
Illustrative Case................................................................................. 6-27
7 Payroll Project.........................................................................7-1
Books of Account and Payroll Records................................................ 7-2
General Information............................................................................ 7-3
Start of Payroll Project......................................................................... 7-6
Appendix A – Start of Short Version of Payroll Project
(Continuation of Payroll Project).........................................................7-16
xvi CONTENTS Payroll Accounting 2018
appendix A: Excel Template Instructions for the

Glo-Brite Payroll Project
(Chapter 7: Short Version)..................................... A-1
I. Getting to Know Excel............................................. A-1
II. Excel Templates for Payroll Project’s Short
Version.............................................................. A-5
III. Illustrative Case.................................................... A-10
IV. Short Payroll Project............................................. A-17
V. Optional Activities.................................................A-20
TAX TABLE A: TABLES FOR PERCENTAGE METHOD OF INCOME TAX
WITHHOLDING............................................................................................................................................................. T-1
TAX TABLE B: WAGE BRACKET METHOD
TABLES FOR INCOME TAX WITHHOLDING................................................................................................... T-5
CHECK FIGURES......................................................................................................................................................... CF-1
GLOSSARY....................................................................................................................................................................... G-1
INDEX.................................................................................................................................................................................. I-1
FEDERAL PAYROLL TAXES CALENDAR......................................................................................................... PC-1
Online Web Appendices (cengagebrain.com)
Controlling Costs: Payroll, Benefits, and Taxes........................... CC-1

appendix B: Social Security Benefits........................................ B-1
What Factors Are Used to Determine Social
Security Benefits?......................................................... B-1
What Benefits Are Provided by Social Security?........... B-2
What Are Reduced Benefits?........................................ B-4
How Does Working After Retirement Affect Social
Security Benefits?......................................................... B-5
How Do You Apply for Social Security Benefits?..........B-6
What Is Medicare?....................................................... B-7

appendix C: Unemployment Benefits...................................... C-1
Unemployment Compensation Benefits........................ C-1
The Need for Payroll and CHAPTER 1
Personnel Records
LEARNING OBJECTIVES
C
an’t wait to get started? Let’s take our time
After studying this chapter, you should be able to:
and get an overview of the entire payroll
process. 1 Identify the various laws that affect employers in their
payroll operations.
It’s not easy being an employer. Many legal
do’s and don’ts must be followed before we even 2 Examine the recordkeeping requirements of these
laws.
begin to consider the costs of employing workers,
3 Describe the employment procedures generally
and the do’s and don’ts are always changing.
followed in a Human Resources Department.
We need to have applications completed, con-
4 Recognize the various personnel records used by
duct interviews, check references, and examine
businesses and know the type of information shown
credit reports. How far can we go in checking on on each form.
the background of an individual applicant? What 5 Identify the payroll register and the employee’s earnings
records should we keep on each employee? Where record.
do we show the calculations that must be com-
pleted in order to give each employee a paycheck?
Get ready to begin the process of understand-
ing payroll operations.
No matter the size of the company, the profitability, the product or service being
sold, or the type of organization, employees have to be paid. This task has become
more difficult as numerous regulations have been enacted. Recent legislation has
only added to the administrative burden, and future legislation will continue this
trend. The payroll person is no longer the employee stuck in the corner who only
appears on payday to distribute paychecks. The job responsibilities have multi-
plied and now require persons with advanced knowledge in the area of payroll to
handle the position. In many cases, the payroll specialist has been on the leading
edge of change and automation.
Payroll professionals are responsible for processing over 4 billion pay state-
ments each year to over 100 million people in the workforce of the United States.
The processing of payrolls allows no margin for error. Employees, employers,
and government agencies monitor the work performed by payroll professionals.
A payroll accounting system is the only operation in a business that is almost
completely governed by various federal, state, and local laws and regulations.
Rules establish who is an employee, what is time worked, when overtime is to be
paid, what deductions are made, when to pay an employee, what benefits have to
be provided, and when taxes are paid. Lack of compliance with these laws and
regulations can result in both fines and back-pay awards.
The payroll professional has risen in the ranks of the accounting profession
and now demands salaries commensurate with his or her peers. The confidential-
ity of the payroll information from each employee’s pay rate to the garnishments
1-1
1-2 Chapter 1 • The Need for Payroll and Personnel Records Payroll Accounting 2018
imposed on some employees has tightened the link to the upper management
teams. The confidence and trust that must be placed in payroll professionals
have made them an integral part of the “inner circle.” This chapter briefly
examines the various laws that affect employers in their payroll operations
and the payroll and personnel records that they use to meet the requirements
of the laws. First, however, let’s take a brief look at payroll accounting as a
profession.
The Payroll Profession

A 2017 payroll survey of large employers conducted by Robert Half Associates
revealed a range of salaries for payroll managers of $63,750–$98,750 and for
payroll clerks of $38,750–$50,250.
Typically, an entry-level payroll clerk collects, reviews, approves, and
records time records. The clerk also updates attendance records, including vaca-
tion, sick, and personal days. Once a payroll is processed, the clerk reviews
the information to ensure the accuracy of each employee’s pay statement. Job
responsibilities will include entering the following information into the payroll
system:
1. Time-worked data.
2. Pay rate changes.
3. Tax rate changes.
4. Employee-authorized payroll deductions.
5. New employee information.
6. Marital and employee allowance changes.
Providing information to the Finance Department concerning the amounts
to be paid for taxes, health insurance premiums, retirement plans, etc., may also
be part of the evolving duties of the advancing payroll professional. One of the
final stages involves the completion of payroll tax returns, employee informa-
tion returns, federal and state census surveys, and fringe benefit and welfare plan
returns.
Payroll professionals must keep abreast of the changes in their field so that
they can remain technically proficient. This need has been met by an association
of payroll practitioners—the American Payroll Association (APA). Membership
in the association is open to anyone interested in or engaged in the support of
payroll accounting. The APA offers professional training seminars and various
publications to its members. Each year, the APA administers examinations for
the payroll accountant and awards certificates to those who pass the exams,
Fundamental Payroll Certification (to demonstrate a baseline of payroll compe-
tency) and Payroll Professional Certification (for the experienced professional to
demonstrate the full-range of payroll competency). This testing and certification
process has helped the payroll profession to gain recognition in the business com-
munity. The APA has also established guidelines for the conduct of the payroll
professional. This “Code of Ethics,” shown in Figure 1.1, sets the direction for
the profession.1
One of a number of publications designed to provide current information
to the practitioner is published by the Research Institute of America, Inc. This
biweekly publication is entitled Payroll Guide, and it is a comprehensive review
of changes in regulations affecting payroll reporting.2
1 For more information on the organization, write to American Payroll Association, 660 North Main Avenue, Suite 100,
San Antonio, TX 78205-1217; Tel: 210-224-6406; APA@americanpayroll.org.
2 Payroll Guide is published by Thomson Reuters, 121 River Street, Hoboken, NJ 07030; Tel: 1-800-431-9025.
Another random document with
no related content on Scribd:
— Mutta sinä itkit kerran sydämesi puhtautta, Allâh kuuli sen ja
antaa sinulle varjotkin takaisin, että olisit — ihminen! —
Mutta Mohamed painoi kätensä sydäntänsä vasten ja itki.
Yhtäkkiä hyppäsi hämähäkki verkostaan hänen rinnalleen, halkaisi

villaisen vaipan ja imutorvellaan puhkaisi hänen valkoisen rintansa.
Tuntui ihana pistos, sydän pysähtyi ja hetken päästä kutoi
hämähäkki niljakasta seittiä haavan päälle, joka heti parani.
Ja Mohamedilla oli rinnassaan ihmisen — koko sydän — — —
*****
Kuollut oli Mohamedin ensimäinen puoliso Chadidja, ja Mohamed

suri häntä — —
Mutta sydämen mustat varjot suurenivat, ja Mohamed valitsi

itsellensä paljon vaimoja, joista rakkain oli ihana 'Ajischa.
Hän istui 'Ajischan kanssa patjaisella vuoteellaan ja lausui ankaria

sanoja rakkaalleen, sillä sydämensä varjot olivat tummuneet, ja
'Ajischa itki.
Niin tapahtui, että Mohamed polttaissaan puhalsi suuria

savurenkaita, jotka ajoivat toisiansa tyynessä huoneessa, ja renkaat
leijailivat ylös lakea kohti. Väsyneen profeetan katse seurasi niiden
kevyttä lentoa, mutta äkkiä heitti hän piippunsa ja alkoi kovasti
vavista. Nurkassa katonrajassa oli suuri hämähäkin verkko, jonka
keskellä istui sydämen kokoinen valkea hämähäkki. —
Mutta pian tointui hän hämmästyksestään, sivalsi käyrän

miekkansa ja ponnahti seisomaan. Itkevä 'Ajischa pelästyi ja luullen,
että hänen kuolemansa hetki oli tullut, kiljaisi kauhuissaan, vaan ääni
katonrajassa lausui:
— Mohamed, puhdas sydämesi katsoo sinua! — Mutta Mohamed

huusi polkien maata:
— Pakene kalpea omatunto! –
Paikallansa istui vaan hämähäkki, ja sen valkoinen rinta hohti.

Mutta
Mohamed iski miekallansa hämähäkin kuoliaaksi.
Kuollut oli profeetan valkoinen, puhdas sydän —, ja varjot kävivät

tummemmiksi!
KUOLEMAN KUVASTIN.
Seitsemän kertaa oli Mohamed ratsastanut pyhän Qa'ban temppelin

ympäri ja seitsemän kertaa oli hän sauvallaan koskettanut sen
mustaa kiveä ennenkuin hän nousi kameelin selkään
matkustaakseen Minâ-laaksoonn rukoilemaan.
Mutta hetken ratsastettuaan tunsi hän mehiläisen piston

otsallansa, otsa paisui, ja profeetta kaipasi pientä kuvastintaan. Se ei
ollut matkassa, ja hänen vihansa oli suuri. Mutta otsa paisui yhä
enemmän, ja Mohamed pelkäsi verenvihoja. —
Ja hän rukoili tuskassaan. Niin tapahtui, että kameelin jalka painui

hiekkaan nilkkaa myöten, ja kuopasta kumpusi suloinen lähde.
Mohamed laskeusi kameelinsa seljästä ja kumartui yli lähteen
reunan, otsaansa katsellakseen, mutta kauhukseen huomasi hän
ensi kerran elämässään, että hän oli — — vanha. Kurttuisella otsalla
oli verinen paise.
Hän nosti kädellään vettä lähteestä ja valeli sillä kipeätä otsaansa.

Kirkkaina helminä valui vesi hänen sormiensa lomitse, mutta hän
huomasi, että ne olivat vanhan sormet. Mutta paisuma otsalla laski,
ja kulkue jatkoi matkaansa.
Profeetan vierellä ratsastava Abu Bekr sanoi hiljaa:
— Allâh kutsui profeettaansa! Mutta Mohamed vaikeni.
He saapuivat Safâ- ja Merwa-vuorten väliseen Minâ-laaksoon,

jossa
Abraham oli seitsemällä kivellä taistellut pahaahenkeä vastaan, ja
Mohamed heitti nuo tavanmukaiset seitsemän kiveä mustaa
kallionseinää
vasten, mutta seitsemäs kivi kimmahti takaisin ja löi Mohamedia
otsaan.
Syntyi taaskin painuma, ja Mohamed pelkäsi verenvihoja.
Niin tulivat he paluumatkalla lähteelle, joka oli syntynyt kameelin

jalan astumalle, ja Mohamed polvistui lähteenreunan yli, mutta
kauhukseen näki hän, että hän oli vanha ja raihnas, otsassa suuri
paisuma.
Hän aikoi juuri nostaa kädellänsä vettä lähteestä, kun seitsemän

mehiläistä tuli lentäen, ja jaloissaan niillä oli se pieni kivi, joka
profeetan otsaan oli ponnahtanut, ne pudottivat kiven lähteeseen,
vesi roiskahti profeetan otsalle, ja paisuma aleni, mutta ympärillä
seisovat sanoivat:
— Mohamed, joku kutsui sinua — — —
Mohamed lepäsi uupuneena vuoteellaan, ja hänen lempivaimonsa

'Ajischa istui hänen vieressään silitellen otsaa, jossa oli kaksi pientä
verinaarmua.
— Mohamed —, sanoi hän, — sinun kasvosi ovat kurttuiset ja

vanhat, sinä olet jo vanha —
Mutta Mohamed nousi kiivaasti vuoteellansa ja tahtoi
kuvastintaan. 'Ajischa antoi hänelle pienen teräväsärmäisen kirkkaan
metallipalan. Hän katseli kuihtuneita kasvojansa siinä, mutta
kuvastin ei ollut sileä, se valehteli, hän ei ollut vanha. Ja Mohamed
iloitsi siitä, ettei hän ollut vanha.
— Se lähde oli kuoleman kuvastin, sillä se valehteli, tämä on

elämän kuvastin, sillä se puhuu totta —, sanoi hän.
Mutta 'Ajischa sanoi:
— Kaunis on elämän kuvastin, sillä se on valhe, synkkä on

kuoleman kuvastin, sillä se on totuus! — Ja sillä hetkellä oli 'Ajischa
herraansa viisaampi.
Mutta Mohamed katsahti vielä kerran kuvastimeen, joka sanoi ettei

hän ollut vanha; ja tämä ilo oli niin suuri, että vanha Mohamed, kuoli
ilosta, ettei ollut vanha — —
V.
PYHÄ GANGES.
Rauhaisana virtaa suuri idän virta, vienot vuolteet hiljaa kulkevat. —
Rauhaisana istuu vanha Ganges, vienot hymyn vuolteet

kasvoillansa kulkevat. —
Rauhaisana kuiskii illan tuuli, lempi sydämessä ihmiset kulkevat.

—
*****
Mutta iltaa seurasi yö, ja yöstä valkeni aamu. Vanha Ganges istui
majansa ovella, ja valmisteli vapisevin käsin viimeisiä saviastioita.
Ahdassuisia ne olivat, sitä viimeistä — suurta retkeä varten.
Hän oli jo saanut tarvittavan luvun valmiiksi ja asetteli niitä päivän

paisteeseen: kuivamaan.
— Paista helteisesti, päivä, viimeisen kerran, lujaksi koveta savi,

sillä sydämeni on jo niin pehmeä —, puhui hän.
Mutta mustat pilvet nousivat taivaalle, päivä pimeni, ja

ukkosensade kasteli maan, ja saviastiat painuivat kokoon. Se päivä
oli vanhan Ganges'in ensimmäinen suuren koetuksen päivä.
— En ole valmis vielä kuolemaan, sydämeni on siis vielä kova —,
puhui hän itseksensä ja itki.
Mutta seuraavana aamuna paistoi päivä pilvettömällä taivaalla, ja

vanha
Ganges laittoi saviruukkujaan.
— Paista tulisesti, päivä, ja kuivuta ne koviksi, että minun

sydämeni pehmiäisi —, puhui hän asetellessaan niitä kuivamaan.
Ja päivä paistoi helteisesti niinkuin ei koskaan ennen, mutta

saviastiat halkeilivat ja putoilivat rikki. Se päivä oli vanhan Ganges'in
toinen suuren koetuksen päivä.
— En ole valmis vielä kuolemaan, sydämeni siis on vielä kova —,

puhui hän itseksensä ja itki.
Seuraavan päivän aamu oli viileä ja kuulakas, päivä paistoi hellästi

ja lämpimästi. Vanha Ganges valmisteli saviruukkujaan ja laittoi niitä
kuivamaan.
— Paista hellästi, oi päivä, ja kuivaa ruukut, että minun sydämeni

pehmiäisi —, puhui hän itsekseen.
Ja päivä paistoi hellien, sopivasti kuivuivat ruukut, ei koviksi kuin

kivi, vaan sitkeiksi ja kestäviksi.
— Joudu, ilta, olen valmis, sydämeni on otollinen —, puhui hän.
Tuli ilta. Palmupuiden suuret lehdet lopettivat huojuntansa,

metsien laulut kuolivat, ja virran vuolteet keinuttivat lootoskukkia.
Valkoisia kiviportaita astui vanha Ganges kädessänsä
saviruukkuja, ne olivat viimeiset ruukkujen koko luvusta. Huojuen
nousi hän portaita ja taittoi notkean köynnöskasvin suuren palmun
vyötäriltä. Hän punoi köynnöksen ruukkujen korvien läpi ja sitoi ne
yhteen. Sitten kiinnitti hän ne hartioillensa ja laskeutui pitkään
laulaen pyhään virtaan.
Tyhjät ruukut kannattivat häntä veden pinnalla ja vain hitaasti

imivät vettä pienistä suistansa. Virran vuolteet veivät vanhusta
mukanaan.
Tuli pimeys. Mustat joutsenet lähtivät kätköistänsä ja liittyivät

vanhuksen seuraan, verkalleen jolui virtaa kuoleman jono.
Lootoskukka syttyi tuleen ja kuiskasi vanhukselle.
— Taita matkaasi elämän ilo! — Mutta vanhus vaikeni. Syttyi

toinen kukka ja puhui:
— Taita matkaasi elämän rakkaus! — Ja vanhus vaikeni. Syttyi

kolmas ja lausui:
— Taita matkaasi elämän tuska! — Mutta yhä vaikeni vanhus. Niin

syttyivät sadat lootokset virran pinnalla ja tarjosivat hänelle kaikkea
mitä elämällä on, ja se yö oli vanhan Ganges'in kolmas suuren
koettelemuksen hetki; mutta hän vaikeni, ja hiljaa lauloi mustien
joutsenten jono Intian yössä. Vaan ruukut liukenivat ja täyttyivät, ja
syvemmälle painui vanhus. —
— Sydämeni ei enää ole kova —, sanoi hän kääntyen joutsenia

päin.
Ja virran vauhti hiljeni, ja sen pinta avartui, sillä laaja meri avautui
virran vuolteille. Punerva päivä nousi merestä ja valaisi kuolevan
kasvoja. Ja vanhus kuiskasi:
— Totuutta ei elämä lahjoittanut, minä vaivun loistavimman

lootoksen kultaiseen syliin, sillä elämällä ei ole totuutta! —
Ja nouseva aurinko punasi vilpoisen virran pinnalla kuolevia

vesikuplia. Mutta mustat joutsenet sousivat ylös hiljaista virtaa ja
lauloivat:
— Pyhä, oi pyhä on Ganges, sillä sen pinnalla uinuu elämän ilo! —
— Pyhä, oi pyhä on Ganges, sillä sen rinnalla hehkuu elämän

rakkaus. —
— Pyhä, oi pyhä on Ganges, sillä sen kuvastimessa näkyy elämän

tuska. —
— Pyhä, oi pyhä on Ganges, sillä sen helmassa nukkuu — —

totuus! Pyhä on kuoleman virta — —
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Payroll accounting 2018 edition Edition

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1 The Need for Payroll and Personnel Records................................1-1

2 Computing Wages and Salaries..................................................2-1

3 Social Security Taxes.................................................................3-1

Returns Required for Social Security Purposes.................................. 3-17

4 Income Tax Withholding............................................................4-1

5 Unemployment ­Compensation Taxes..........................................5-1

6 Analyzing and Journalizing Payroll.............................................6-1

appendix A: Excel Template Instructions for the

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Controlling Costs: Payroll, Benefits, and Taxes........................... CC-1

The Payroll Profession

Mutta Mohamed painoi kätensä sydäntänsä vasten ja itki.

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5 Unemployment Compensation Taxes..........................................5-1

appendix A: Excel Template Instructions for the