Chapter 7 Project

Topics: Income tax in the United States, Tax, Wage Pages: 141 (21836 words) Published: August 26, 2012


Payroll Project
Chapter 7 consists of a simulation, or practice set, for payroll accounting. You will apply the knowledge acquired in this course to practical payroll situations. This simulation is a culmination of the information presented in the textbook. After completing this chapter, you should be able to: 1 2 3 4 5 6 Prepare payroll registers. Maintain employees’ earnings records. Journalize and post payroll and payroll tax entries. Complete federal, state, and city tax deposit forms and journalize the transactions. Prepare various quarter-end and year-end payroll tax forms. Make the accrual entries for the payroll at the end of a year.

What now? Can we process a payroll? How about the accounting entries and postings? Can we complete the deposit forms and the ‘‘dreaded’’ payroll tax returns? What have we learned in the previous six chapters? Did I waste this semester? Let’s find out. Here’s your real-world test.

7-1 9781435463509, Payroll Accounting, 2012 Edition, Bernard J. Bieg - © Cengage Learning. All rights reserved. No distribution allowed without express authorization


CHAPTER 7 • Payroll Project

Payroll Accounting 2012

The Payroll Project will provide you with extended practice in keeping payroll records and accounting for payroll transactions. Your completion of this project involves an application of the information learned in the preceding chapters. The work provided resembles that prevailing in the office of every employer in the United States subject to the provisions of the Federal Wage and Hour Law, income tax withholding laws, social security laws, and unemployment compensation laws. Even though most payroll systems now employ computers, it is important that the practitioner understand the operations performed by the computer. If your assignment involves the use of Appendix A (computerized option) to complete this project, it is suggested that you do at least one of the payrolls manually so that you gain a thorough understanding of the steps needed to be completed on a typical payday. In this project, you are employed by Glo-Brite Paint Company. As the payroll clerk in the Accounting Department, you have been in charge of the payroll records since the company first began operations on January 5 of the current year. The company employs about 800 individuals; but for the purpose of this project, payroll records will be kept for only a dozen or so employees. By understanding the principles of payroll accounting for a few employees, you should be able to keep similar records for several hundred employees. For purposes of this project, you will assume that the payroll records, tax reports, and deposits have been completed and filed for the first three quarters of this year. Your work will involve the processing of the payrolls for the last quarter of the year and the completion of the last quarterly and annual tax reports and forms.

The books of account and payroll records that you will use in this project are described below.

You will use a two-column general journal to record all transactions affecting the accounts in the general ledger. This book of original entry serves as a posting medium for transactions affecting the payroll accounts.

General Ledger
A general ledger, used in keeping the payroll accounts, is ruled with balance-column ruling, which makes it possible to keep a continuous record of each account balance. Some of the ledger accounts will have beginning balances carried over from the first three quarters of the year. The chart of accounts in Figure 7-1 has been used in opening the general ledger accounts (pages 7-33 to 7-40). Glo-Brite Paint Company has other accounts in its general ledger, but those listed in the partial chart of accounts are the only accounts required in completing this project.

Payroll Register
The payroll register provides the information needed...
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